If two resources are highly substitutable for one another,
A) a decrease in the price of one will increase unit costs of production.
B) an increase in the price of one will increase the demand for the other.
C) an increase in the price of one will reduce the demand for the other.
D) a decrease in the price of one will increase the demand for the other.

Question

Quizplus · Accepted Answer

When two resources are highly substitutable, an increase in the price of one resource will lead to an increase in the demand for the other resource as producers switch to the cheaper substitute.

If Two Resources Are Highly Substitutable for One Another