Refer to the information provided in Figure 12.4 below to answer the question(s) that follow. Figure 12.4
There are two sectors in the economy, X and Y, and both are in long-run, zero-profit equilibrium at the intersections of S 0 and D 0.
-Refer to Figure 12.4. Assume consumer preference changes toward X and away from Y. Ceteris paribus, the likely change in capital flow in sector X will cause the industry's short-run ________ curve to shift to the ________.
A) supply; left
B) supply; right
C) demand; left
D) demand; right

Question

Refer to the information provided in Figure 12.4 below to answer the question(s) that follow.  Figure 12.4
There are two sectors in the economy, X and Y, and both are in long-run, zero-profit equilibrium at the intersections of S 0 and D 0. 
-Refer to Figure 12.4. Assume consumer preference changes toward X and away from Y. Ceteris paribus, the likely change in capital flow in sector X will cause the industry's short-run ________ curve to shift to the ________.
A) supply; left 
B) supply; right 
C) demand; left 
D) demand; right

Quizplus · Accepted Answer

When consumer preference shifts toward product X and away from Y, demand for X increases. To meet this increased demand, the industry will likely increase production, which requires more capital. This increase in production and capital flow to sector X will cause the short-run supply curve for product X to shift to the right, indicating an increase in supply.

Refer to the Information Provided in Figure 12