If two of a producer's goods are substitutes in production,this suggests that the producer (with her fixed set of resources)will need to reduce production of one good when she:
A)produces less of the other good.
B)produces more of the other good.
C)has an increase in resources.
D)produces more of the other good and has an increase in resources.

Question

Quizplus · Accepted Answer

If two goods are substitutes in production, it means that they use similar resources to be produced. Therefore, if the producer decides to produce more of one of the goods, she will necessarily have to allocate more resources to that good, which will result in a reduction of resources available for producing the other good. Therefore, the producer will need to reduce production of the other good when she produces more of the substitute good.

If Two of a Producer's Goods Are Substitutes in Production,this