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 S0 and D0.
-Refer to Figure 12.4. Assume consumer preference changes toward X and away from Y. Ceteris paribus, the likely change in capital flows in sectors X and Y will eventually________ in industry X and ________ in industry Y.
A) increase the price to P1; decrease the price to P1
B) decrease the price to P0; increase the price to P0
C) increase the price to P1; increase the price to P0
D) decrease the price to P0; decrease the price to P1
Correct Answer:
Verified
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