Question

which of the following three statements are true?

I) Increases in prices of a good incentivize consumers to economize by using less and seeking alternatives.

II) Increases in prices of a good incentive firms to bring more goods to market.

III) Increases in input costs incentivize firms to economize by seeking out substitutes and alternatives, and use technology to conserve on the input.

II only

I, II, & III

I & II

I only

Answer 1

Ans: I, II, & III

Statement I : True

Statement II : True

Statement III : True

Explanation:

Increases in prices of a good encourage  consumers to seek alternatives .Increases in prices of a good motivates  firms to bring more goods to market in order to earn more profit . Increases in input costs leads increase in cost of production. So firms will economize the production process by seeking out substitutes and alternatives, and use technology to conserve on the input.