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 Y 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 Y 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 away from Y, demand for Y decreases. This leads to a decrease in the profitability of producing Y, causing capital to flow out of the industry. In the short run, this would decrease the industry's ability to supply Y, shifting the supply curve to the left.

Refer to the Information Provided in Figure 12