Suppose that you are investigating the market for aluminum. The price of steel?, a substitute? good, has decreased. Which of the following would best describe the market reaction to this? event?
A. The supply of steel increases since steel firms must produce more steel to make up for the price decrease.
B. The demand for aluminum ?decreases, which creates a surplus of aluminum?, causing the price of aluminum to decrease.
C. The demand for aluminum ?decreases, creating a shortage and forcing the price of aluminum to increase.
D. The supply of aluminum decreases since the price of steel decreases.
Ans: B. The demand for aluminum ?decreases, which creates a surplus of aluminum?, causing the price of aluminum to decrease.
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