2. A company manufactures both pens and pencils in the same facility. The firm’s production capacity is shared between these two products. Due to a federal ruling requiring all elementary school students to use only pencils, the overall demand for pencils has shifted outward leading to an increase in pencil prices. Surprisingly, this has had no effect on pen demand. The firm will find in the short term that

a. the cost of producing pencils rises.

b. the cost of producing pens falls.

c. pencils are less profitable than pens.

d. the cost of producing pens rises.