1. The consumers are basically right. Most courses are not really worth taking for most students, so the easy A is the best choice.
2. The course that offers the easy A still gives the student the option to learn something, but the course that requires learning does not give the student the option to earn an easy A. So the option value is always with the courses that offers the easy A.
3. Consumers are myopic, and their preference for an easy A is irrational. (This is the view that many professors hold implicitly.)
4. Grades are measurable, and real learning is not. Consumers think grades are more important than they really are, because what is measured and reported is more salient than what is unmeasured.

No doubt, all of these may be at work during any undergraduate career. One commenter adds a fifth:

Consumers are in school for other reasons (find a mate, have fun for a couple of years, participate in sports or other activities) easy classes allow more time for this. To me this is a little different from #1 which I take to mean, that knowledge gained from the course is not helpful in performing a future job.

Evidence from research by Thomas Stanley suggests that this is entirely plausible. I would further hypothesize that this type of behaviour is most common in core, required, or remedial courses.

Prof. Kling goes on to suggests:

I should note that one potential solution to a competitive race-to-the-bottom in terms of rigor would be to have external examinations. When I was a student at Swarthmore in the Honors program, our exams were written and graded by professors from outside the college.

If students are motivated by grades, then separating the examining function from the teaching function changes the consumers' incentive. With the exam exogenous, my grade-motivated students would want my course to be rigorous rather than easy.

But exogenous testing does exist, at least in some fields, in the form of graduate qualifying exams like the GRE, MCAT, and LSAT. And in these fields, students will demand rigorous courses. I remember a chemistry professor announcing that we would be skipping the section on organomercuric reactions but advising that students would do well to study the chapters on their own, as the MCAT was fond of asking about them; the pre-meds were visibly annoyed. Students learn which professors best prepare them for these tests.

These exogenous tests, though, miss the point of the race-to-the-bottom. Most students aren't just looking for easy classes; they're looking for easy majors. What are we to make of the swelling ranks of (tele)communications, criminal justice, sports management, and the like? To ask that really asks 'What's the point of higher education?,' a topic I've covered before here and here.