Suppose a company expects prices in general to rise by 5%,but the price of its product rises by 2%.How will the company respond to the price change?
A) It will increase production since it's getting a higher price for the product.
B) It will increase production more slowly since it's price is rising more slowly than average.
C) It will reduce production since it perceives a relative decline in the demand for its product.
D) It will stop production and shut down until prices rise more quickly.
Correct Answer:
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