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Spring 2024 Supply and Demand Te
Question 1-3
How does price send a signal to consumers?
The lower the price, the lower the quantity of a good or service consumers will be willing and able to buy.
The higher the price, the higher the quantity of a good or service consumers will be willing and able to buy.
O The higher the price, the lower the quantity of a good consumers will be willing and able to buy.



Answer :

Final answer:

Price signals influence consumer and producer behavior.


Explanation:

Price serves as a signal to both consumers and producers. Consumers respond to price changes by adjusting their purchasing behavior: when prices are high, they buy less, and when prices are low, they buy more. On the other hand, producers react to price changes by altering the quantity they supply: high prices lead to increased supply, while low prices result in decreased supply.


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