The correct answer is B) Producers would decrease the supply of leather gloves to drive the price even higher.
Indeed, unless an external factor keeps them from such practices; their logic is in accordance with the capitalistic principle of offer and demand. Historically that has happened countless times and the best example is the oil market. The OPEC was created exactly for that purpose but there are two main factors that may keep them from engaging in such practices: preventative government intervention or consumer’s rejection (which usually inspires the former). They make the prices fluctuate depending on the political and social reaction to their price manipulation and usually try to get away with as much as price hike as they can.
