An Increase in the Price of a Product Will Reduce

question 304

Multiple Choice

An increase in the price of a product will reduce the amount of it purchased because

• A) the higher price will signal to consumers that the good is of low quality.
• B) the higher price means that real incomes have risen.
• C) consumers will substitute other products for the one whose price has risen.
• D) consumers substitute relatively high-priced for relatively low-priced products.

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Definitions:

Antitrust Enforcement

Government activities aimed at preventing anti-competitive practices, mergers, and monopolies to promote fair competition.

Market Power

The ability of a company or group to manipulate the price of an item in the market by controlling its supply, demand, or both.

Vertical Relationships

Business arrangements or transactions between companies that operate at different levels within the same supply chain.

Horizontal Contracts

Agreements between firms or entities at the same level in the supply chain, often to coordinate strategies or manage joint ventures.