Leather Belts and Leather Shoes Are Substitutes in Production

question 54

Multiple Choice

Leather belts and leather shoes are substitutes in production. If style changes increase the demand for leather belts, the supply curve of leather shoes will shift

• A) leftward and the equilibrium price of leather shoes will fall.
• B) leftward and the equilibrium price of leather shoes will rise.
• C) rightward and the equilibrium price of leather shoes will fall.
• D) rightward and the equilibrium price of leather shoes will rise.

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Definitions:

Excess Capacity

A situation where a firm's facilities can produce more than is necessary to meet the demand, often leading to underused resources.

Profit-Maximizing

The process or strategy by which a firm determines the price and output level that returns the greatest profit.

Profit-Maximizing Quantity

The production level where a company reaches its maximum profitability.

Consensus

is a group decision-making process where discussions continue until all members agree on a particular solution or decision, highlighting collaboration and collective agreement.