Which of the following statements is true regarding push and pull systems in competitive markets?

• A. Push systems rely on producers forecasting demand and producing goods in advance, while pull systems respond directly to actual consumer demand.
• B. Pull systems are characterized by producers setting prices without considering consumer preferences.
• C. Both push and pull systems ignore market equilibrium in competitive markets.
• D. In push systems, goods are produced only after consumers place orders.

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the definitions of push and pull systems in the context of competitive markets. A push system involves producers forecasting demand and producing goods in advance, while a pull system produces goods in response to actual consumer demand.
2. Step 2: Analyze the first statement: 'Push systems rely on producers forecasting demand and producing goods in advance, while pull systems respond directly to actual consumer demand.' This aligns with the standard economic understanding of these systems.
3. Step 3: Evaluate the second statement: 'Pull systems are characterized by producers setting prices without considering consumer preferences.' Consider whether this matches the concept of pull systems, which typically respond to consumer demand and preferences.
4. Step 4: Examine the third statement: 'Both push and pull systems ignore market equilibrium in competitive markets.' Reflect on how market equilibrium relates to supply and demand in these systems and whether either system ignores it.
5. Step 5: Review the fourth statement: 'In push systems, goods are produced only after consumers place orders.' Compare this with the definition of push systems, which usually produce based on forecasts rather than actual orders.