If a producer can use its factors of production to produce either good A or good B,then a rise in the price of A
A)increases the supply of B.
B)decreases the supply of A.
C)increases the supply of A.
D)decreases the supply of B.
E)increases the demand for A.

Question

Quizplus · Accepted Answer

When the price of good A increases, the producer is incentivized to allocate more resources to produce A instead of B, leading to a decrease in the supply of B as resources are diverted away from its production.

If a Producer Can Use Its Factors of Production to Produce