Final answer:
Resource substitution refers to a firm's capability to transfer resources from one product's production to another, emphasizing the adaptability of factors of production.
Step-by-step explanation:
A firm's ability to move resources from the production of one product to another is referred to as resource substitution. This concept highlights the flexibility that resources, also called factors of production, must have to allow for production adjustments or changes based on demand, innovations, or alterations in market conditions. When resources have already been produced and can be utilized in the creation of various goods and services, it ensures operational efficiency and allows businesses to adapt to economic situations more effectively.