Suppose that we observe a decrease in the price of sunscreen and fewer people buying sunscreen. What could have caused this change?
A) a violation of the law of demand
B) a tax on sunscreen manufacturers
C) a new study documenting that the ingredients in sunscreen are linked to an increased risk of malignant melanoma, a dangerous form of skin cancer
D) a new production process that reduces the costs of making sunscreen

Question

Quizplus · Accepted Answer

A decrease in the price of sunscreen accompanied by fewer people buying it suggests a shift in consumer preferences or perceptions rather than a simple market supply or demand shift. Choice C, indicating a new study linking sunscreen ingredients to cancer, could lead to a decrease in demand as consumers avoid the product due to health concerns, which could also lead to a decrease in price as suppliers attempt to sell their now less desirable product.

Suppose That We Observe a Decrease in the Price of Sunscreen