In the context of microeconomics, what could a negative industry growth rate for potato chips indicate?

• A. The price of potato chips is rising due to higher demand.
• B. Potato chip producers are experiencing increasing profits.
• C. New firms are entering the potato chip industry at a rapid pace.
• D. The demand for potato chips is decreasing over time.

Answer: (D)

Verified step by step guidance

1. Understand that the industry growth rate measures how the total output or sales in an industry change over time.
2. Recognize that a negative industry growth rate means the total output or sales in the potato chip industry are declining.
3. Recall that if the price of potato chips is rising due to higher demand, the industry growth rate would likely be positive, not negative.
4. Consider that increasing profits and new firms entering the industry usually occur when the industry is growing, so these options contradict a negative growth rate.
5. Conclude that a negative industry growth rate most likely indicates that the demand for potato chips is decreasing over time, leading to lower sales and output.