If A and B are substitutes and the cost of a factor of production used in the production of A increases,then the price of
A)B falls,but the price of A rises.
B)B rises,but the price of A falls.
C)A falls,and the price of B will stay unchanged.
D)A and B fall.
E)A and B rise.

Question

Quizplus · Accepted Answer

When the cost of a factor of production for A increases, the production cost of A rises, leading to an increase in A's price. Since A and B are substitutes, the demand for B will increase as consumers switch from A to B, driving up B's price as well.

If a and B Are Substitutes and the Cost of a Factor