Assume that the production technology required to produce goods X and Y is very similar. If a firm that is producing good X notices that the market price of good Y is rising, it will:
A)intensify its production of good X.
B)shift into producing good Y.
C)anticipate a price increase for good X.
D)charge a higher price for good X.

Question

Quizplus · Accepted Answer

When the price of a similar good increases, firms have an incentive to produce more of the now higher-priced good.

Assume That the Production Technology Required to Produce Goods X