When the Price of a Resource Goes Up and Firms

question 112

Multiple Choice

When the price of a resource goes up and firms seek other suitable resources, this is called the

• A) substitution in production effect.
• B) substitution in demand effect.
• C) elasticity effect.
• D) inelasticity effect.

---

Definitions:

Perfectly Elastic Demand

A market situation where demand for a product is infinitely responsive to changes in price, depicted by a horizontal demand curve.

Cherry Sno-Cones

A flavored shaved ice treat, typically dyed red and flavored to taste like cherry.

Wool Market

The global or regional trade area where wool is bought and sold, influenced by supply and demand dynamics.

Perfectly Competitive

A market structure where many firms offer a homogeneous product, and no single buyer or seller can influence the market price.