A strike at the Financial News in London shut down its production, and the sales of a competing newspaper, the Broad Street Journal, increased dramatically, with no increase in price.Based upon this, what can you say about the Broad Street Journal's supply curve?

Question

Quizplus · Accepted Answer

The fact that the sales of the Broad Street Journal increased dramatically with no increase in price suggests that the supply curve is horizontal, meaning that the quantity supplied can be increased without any change in price. If the supply curve had a positive slope, then an increase in quantity supplied would only be possible with an increase in price. The strike at the Financial News did not affect the Broad Street Journal's ability to produce and sell newspapers, so it is unlikely that its supply curve shifted as a result of the strike.

A Strike at the Financial News in London Shut Down