Anything that alters the price of outputs relative to the price of inputs
A)will alter the quantity produced by the firm.
B)will alter the quality produced by the firm.
C)will alter the nominal income effect.
D)will have no effect whatsoever on output.

Question

Quizplus · Accepted Answer

Any change in the relative prices of inputs and outputs will alter the profit margin of the firm, which will affect its decision on how much to produce. If the input prices increase relative to the output prices, the profit margin will decrease, and the firm might reduce the quantity produced. Conversely, if the output prices increase relative to the input prices, the firm might increase the quantity produced to take advantage of the higher profit margin.

Anything That Alters the Price of Outputs Relative to the Price