Milk Can Be Used to Produce Cheese or Butter

question 299

Multiple Choice

Milk can be used to produce cheese or butter.If the price of a pound of butter rises,what happens to the supply of cheese?

• A) The supply of cheese increases.
• B) The supply of cheese decreases.
• C) The supply of cheese stays the same, and there is no change in the quantity supplied of cheese.
• D) The supply of cheese stays the same, and there is a decrease in the quantity supplied of cheese.
• E) The supply of cheese could increase, decrease, or stay the same depending on what happens to the supply of butter.

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Definitions:

Substitution Effect

Variations in consumption habits influenced by the change in prices of goods in comparison to each other, leading to a preference shift among consumers from one good to another.

Cheaper

Describes goods or services being offered at a low price, especially in relation to comparable items.

More Expensive

Refers to items or services that have a higher cost or price in comparison to others.

Budget Constraint

The cap on the various combinations of goods and services a consumer is capable of purchasing, dictated by their earnings and the costs of these products and services.