The market price of output affects
A)the supply of the resources used to produce it
B)the demand for the resources used to produce it
C)the marginal product of the resources used to produce it
D)the marginal resource cost of the resources used to produce it
E)the total cost of the resources used to produce it

Question

Quizplus · Accepted Answer

The market price of output affects the demand for the resources used to produce it. If the market price of output is high, then the demand for the resources used to produce it will increase as producers will want to produce more of the output in order to earn higher profits. This increased demand for resources will lead to an increase in their price. On the other hand, if the market price of output is low, then the demand for the resources used to produce it will decrease as producers will not want to produce as much of the output due to the lower profits. This decreased demand for resources will lead to a decrease in their price. Therefore, the market price of output has a direct impact on the demand for the resources used in production.

The Market Price of Output Affects