Question

Which of the following would cause prices to drop? A. Increased production by business B. Increased taxes on business C. Higher levels of demand by consumers D. A reduction in the money supply

Answer 1

It would actually be an increased production by the business.

Haha, I had to think for a tiny bit and re-check my answer to make sure it was right before giving it. Would hate to see you get it wrong. 

Answer 2

Answer:

A. Increased production by business

Explanation:

In a market economy, the interaction between supply and demand for goods and services determines price. This is the essence of the law of supply and demand, whereby in situations where demand increases, price tends to increase. Conversely, when demand decreases, price tends to decrease. Similarly, when supply increases, price tends to decrease. When supply decreases, price tends to increase as good becomes scarcer.

The increase in supply occurs when the production of goods increases. For example, if a firm produces 100 shoes a month, and the next month production increases to 200, supply will be increased to the same degree. If demand remains constant, the tendency is for the price of the shoe to decrease.