Explain how changes in prices of other products influence the supply of a given product.
Explain how changes in prices of other products influence the supply of a given product.
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Suppose price of other products rises. It makes production of these products more profitable because their cost is unchanged.
As a result, the firm shifts its resources from the given product to the production of other products.
Supply of the given product falls.
Similarly, fall in the price of other products increases the supply of the given product.
In comparison, it also marks the given product less.
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