If the exchange rate of USD to BTC drops dramatically, unless there if an insurmountable security flaw with or attack on the network, it makes no sense for vendors to flee.
I sell gallons of milk for $2. Yesterday, the exchange rate was 1 BTC = $1. This morning, someone started selling hundreds of thousands of coins, causing the rate to fall to 1 BTC = $0.02. Today, I can sell gallons of milk for 200 BTC, 50 times as many coins.
I have more of an incentive today to sell for BTC, as the potential for future value is inversely proportional to the size of the "crash".
Technically correct. Unless you have a 100,000 gallons of milk from yesterday that you bought with 2 BTC each. You now reprice them at 200 BTC to maintain there value. However, your customers don't get to take their BTC and conveniently take the 2 BTC in their wallets and change it into 200 BTC. So now, no one can afford your milk and you make no money. You have just described Hyper-Inflation. And it hurts vendors and companies hard and fast. Your best defense is to lower prices to a point they can afford, to offload your product. The best think to do would to keep the Milk at 2 BTC maybe 3 or 4 BTC. And then bail on your next purchase of milk. Basically pass it on to your vendor.