If the price of an input falls, a firm would increase the use of that input for

Question

If the price of an input falls, a firm would increase the use of that input for two reasons: The input is now more productive, and the firm can substitute this input for other relatively more expensive inputs. a. ductive, and overall producti meaning a firm may choose to increase production Overall production costs are now lower and the firm can substitute this input for other relatively more expensive inputs. c. Overall production costs are now lower and the firm will have more of other inputs to use with the one in question.

Explanation / Answer

Solution: Overall production costs are now lower and the firm can substitute this input for other relatively more expensive inputs.

Explanation: If the price of an input decreases then there will be a fall in the cost of production, thus allowing the firm to substitute this input for other relatively more expensive inputs

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