Impact of Rising Prices on Consumer Behavior

Answered using GPT-4o mini by AI Answer Generator

Question:

When the price of a good rises:

the value of the good rises as well.

demand for the good will decrease.

consumers will economize.

supply will increase.

Answer:

When the price of a good rises, the most accurate statement is:

consumers will economize.

This means that as the price increases, consumers may look for alternatives, reduce their consumption of that good, or find ways to use it more efficiently.

The other statements can be explained as follows:

  • The value of the good rises as well: This is not necessarily true; the price increase does not always reflect an increase in value to consumers.

  • Demand for the good will decrease: This is generally true in the context of the law of demand, which states that as the price of a good rises, the quantity demanded typically decreases. However, this statement is not as direct as "consumers will economize."

  • Supply will increase: This can be true in the long run as higher prices may incentivize producers to supply more of the good, but it does not directly relate to the immediate effect of a price increase on consumer behavior.

So, the best answer in the context of consumer behavior is that consumers will economize.