A rise in the price of a substitute in production for a good leads toA) an increase in the supply of that good.B) no change in the supply of that good; instead there is a change in thequantity supplied.C) a decrease in the quantity of that good supplied.D)no change in either the supply or the quantity supplied of the good.E) a decrease in the supply of that good.

Answered: A rise in the price of a substitute in…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A rise in the price of a substitute in production for a good leads to
A) an increase in the supply of that good.
B) no change in the supply of that good; instead there is a change in the
quantity supplied.
C) a decrease in the quantity of that good supplied.
D)
no change in either the supply or the quantity supplied of the good.
E) a decrease in the supply of that good.

Expert Solution

Step 1

Demand: - Demand is the relationship between the quantity demanded and the price of a good. There is an inverse relationship between quantity demanded and price, which means if the price of a good increases then the quantity demanded decreases and if the price of a good decreases then the quantity demanded increases.

Supply: - Supply is the relationship between the quantity supplied and the price of a good. There is a direct relationship between the quantity supplied and the price of normal goods which means if the price increases quantity supplied increases and if the price decreases the quantity supplied also decreases.

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