Question

The output effect means that a firm will ______. Multiple choice question. sell more of one input when the price of another input falls and less of that particular input when the price of the other input rises purchase more of one input when the price of another input falls and less of that particular input when the price of the other input rises purchase less of one input when the price of another input falls and less of that particular input when the price of the other input rises purchase more of one input when the price of another input rises and less of that particular input when the price of the other input rises

Answer 1

Answer: Purchase more of one input when the price of another input falls and less of that particular input when the price of the other input rises

Step-by-step explanation:

The Output effect is meant to explain what happens when the price of an input changes. If an input price increases for instance, production costs will rise and the company will have to buy less of other inputs to keep costs stable.

Conversely, if the price of other inputs fall, the company will see production costs fall which will enable them to purchase more of inputs which didn't change in price.