If A and B are complements and the cost of a factor of production used in the production of A decreases,then the price of
A)both A and B will rise.
B)both A and B will fall.
C)A will fall and the price of B will rise.
D)A will rise and the price of B will fall.
E)A will fall and the price of B will remain unchanged.

Question

Quizplus · Accepted Answer

If the cost of a factor of production used in the production of A decreases, the production of A becomes cheaper and more of it will be produced. As A and B are complements, an increase in the supply of A will increase the demand for B, causing its price to rise. Therefore, A will fall and the price of B will rise.

If a and B Are Complements and the Cost of a Factor