The prices of related goods matter when determining supply because they affect:
A) the opportunity cost of production.
B) whether or not a good will sell.
C) the competition in the market.
D) the availability of substitute goods.

Question

Quizplus · Accepted Answer

The prices of related goods affect the opportunity cost of production, as producers may choose to produce one good over another if the prices of related goods change. For example, if the price of corn (a primary ingredient in animal feed) increases, livestock farmers may choose to switch to a different type of feed, such as soybeans, which would increase the demand (and price) of soybeans. This would then affect the supply of soybeans, as farmers may choose to allocate more resources towards producing soybeans due to the increased demand and price.

The Prices of Related Goods Matter When Determining Supply Because