If a and B Are Substitutes in Production and the Price

question 77

Multiple Choice

If A and B are substitutes in production and the price of A falls,the supply of B

• A)increases,and the price of B rises.
• B)increases,and the price of B falls.
• C)decreases,and the price of B falls.
• D)decreases,and the price of B rises.
• E)does not change.

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Definitions:

Consumer Surplus

The contrast between what consumers intend to spend on a good or service and the actual amount they part with.

Producer Surplus

The difference between how much producers are willing to accept for a good versus how much they actually receive.

Price Support

Price set by government above free-market level and maintained by governmental purchases of excess supply.

Producer Surplus

The difference between the amount producers are willing to accept for a good or service and the actual higher market price they receive.