Final answer:
The increase in obsolescence of products over time is one reason why prices tend to decrease over time. Companies need to attract consumers with lower prices for outdated products in order to sell them and remain competitive in the market.
Step-by-step explanation:
The increase in obsolescence of products over time is one reason why prices tend to decrease over time. When products become outdated or replaced by newer technologies or innovations, their demand decreases, causing a decline in their prices. This can be seen, for example, in the technology industry, where the prices of older models of smartphones or computers tend to decrease as newer models are released.
In addition to increased competition, obsolescence contributes to a decrease in prices over time because companies need to attract consumers with lower prices in order to sell their products. If companies do not adjust their prices to reflect the decrease in demand for outdated products, they risk losing sales to competitors offering newer and more advanced alternatives at lower prices.
Overall, as products become obsolete or outdated, their prices tend to decrease due to a decline in demand and the need for companies to remain competitive.