The Substitution Effect Indicates That a Profit-Seeking Firm Will Use

question 158

Multiple Choice

The substitution effect indicates that a profit-seeking firm will use

• A) more of an input whose price has fallen and less of other inputs in producing a given output.
• B) more of all inputs if production costs fall.
• C) more of those inputs whose marginal productivity is the greatest.
• D) less of an input whose price has fallen and more of other inputs in producing a given output.

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