A company that makes mobile phones introduces a new, faster model that has strong consumer interest. However, the old model is still available. What will most likely happen to the price of the old model, and why?
Answer
A
The price will fall to discourage the producer from making more old models.
B
The price will fall to encourage consumers to continue to purchase it.
C
The price will rise to encourage consumers to buy both models in equal amounts.
D
The price will rise to encourage the producer to make more old models.
Explanation
The faster new model is likely to attract buyers away from the old model, reducing demand for it. The company can lower the old model’s price to make it more appealing and encourage consumers to keep purchasing it. Therefore, the most likely outcome is that its price will fall to encourage continued purchases.
AI-written and checked against the verified answer.