Product Rebates are, of course, the opposite of Artificial Costs
These rebates are used to decrease the effective price of the commodity, resulting in increased demand, and increased production.
The lower Market Price causes increased Consumer Demand, and thus Increase Supplier Production.
But the Rebate has to be paid by someone – The total economic cost of producing Qn is Pt per unit quantity, not Pn.
Suppliers will go bankrupt quickly if they sell their products below their cost of production.
Somebody has to cover the difference.
