Coal and iron ore are complements in the manufacture of steel. An increase in the price of coal would lead to
A) an increase in the demand for iron ore as producers substitute more iron ore for coal in the production process.
B) a decrease in the demand for iron ore as steel manufacturers reduce production of steel.
C) an increase in the supply of iron ore as iron ore producers see an opportunity to expand their markets.
D) no change in the demand for iron ore since the steel makers must use both iron ore and coal if they are to make steel.
B
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Research into new technologies
a. provides positive externalities because it creates knowledge others can use. b. results in negative externalities because government funding for research causes less government spending in other areas. c. is protected by patent laws, which eliminates the need for government intervention. d. should only be funded by the corporations that will receive the profits from the research.
For a monopolistically competitive firm,
a. marginal revenue and price are the same. b. average revenue and price are the same. c. at the profit-maximizing quantity of output, price equals marginal cost. d. at the profit-maximizing quantity of output, price equals the minimum of average total cost.