DECA Hospitality Services Team Decision Making Practice Exam

Which of the following is a typical result of price instability?

1. Increased Consumer Savvy

2. Easier Price Comparison

3. Difficulties in Consumer Planning

4. Increased Demand for Goods

The correct answer is: Difficulties in Consumer Planning

Price instability typically leads to difficulties in consumer planning. When prices fluctuate significantly, consumers find it challenging to budget for purchases or make decisions about what to buy and when to buy it. This uncertainty can cause hesitation or reluctance to spend, as consumers may be unsure whether prices will rise or fall in the near future. For example, if consumers know that a particular product's price is likely to increase, they may rush to buy it now, which can lead to stock shortages and further price instability. Conversely, if they anticipate a price drop, they might wait to make purchases, which can also disrupt market demand. This unpredictable environment complicates financial planning for consumers who aim to manage their expenses effectively. In contrast, increased consumer savvy and easier price comparison might occur due to price instability; however, these are not direct results of instability itself. Increased demand for goods is generally associated with stable or declining prices, rather than instability.