A leather company produces shoes and belts. What will the company do if it expects the price of shoes to rise in the near future?

Question

Quizplus · Accepted Answer

If the company expects the price of shoes to rise in the near future, it should focus its resources on shoe production in order to increase its profits. This means moving resources from belt production to shoe production, thereby decreasing the supply of belts. This would allow the company to capture the higher profits from the expected increase in shoe prices. Option A is not a feasible choice as it requires entering into a completely new market, which would require significant resources and time. Option B would decrease the supply of shoes, leading to an increase in price which would not necessarily benefit the company. Option D is not the best choice as it does not take into account the potential increase in profits from shoe production.

A Leather Company Produces Shoes and Belts