Final answer:
Inventory prices might decrease due to technological improvements, increased competition, merchandise becoming obsolete or going out of style, or an economic recession. These factors can lead to a reduction in price due to reduced costs, necessity to lower prices to compete, or decreased consumer spending.
Step-by-step explanation:
Events that might cause inventory prices to decrease include:
- Technological improvements in the industry: An improvement in technology typically reduces the cost of production, leading to an increase in supply. This increase in supply can be represented as a rightward or downward shift in the supply curve, often resulting in lower prices.
- Increased competition: When there are more companies offering similar products or services, they often lower prices to attract customers, leading to a decrease in inventory prices.
- The merchandise goes out of style or becomes obsolete: Outdated or unfashionable products are usually discounted to clear out inventory, lowering their price.
- An economic recession: During a recession, consumers have less money to spend, which can lead to lower consumer demand. Companies might lower prices to encourage purchasing, thus decreasing inventory prices.
On the other hand, options such as increased customer demand typically lead to higher prices because consumers are willing to pay more for the product, and the demand curve shifts to the right.