Goods x and y are perfect substitutes. When the market price of good x is $5/unit, firm F produces 500 units of x. When the price of y rises, 100 consumers of y shift to the consumption of good x. This causes industry analysts to believe that firm f will increase quantity supplied of x by 100 units to match this increased demand. This conclusion is flawed because a. It assumes that firm f does not export good x. b. It assumes that the price of x will not increase in the near future. c. It assumes that firm f does not export good x. d. It assumes that firm f is the only producer of good x. e. It assumes that the supply curve of x will shift to the right in response to the increased demand.
Goods x and y are perfect substitutes. When the market price of good x is $5/unit, firm F produces 500 units of x. When the price of y rises, 100 consumers of y shift to the consumption of good x. This causes industry analysts to believe that firm f will increase quantity supplied of x by 100 units to match this increased
This conclusion is flawed because
a. It assumes that firm f does not export good x.
b. It assumes that the price of x will not increase in the near future.
c. It assumes that firm f does not export good x.
d. It assumes that firm f is the only producer of good x.
e. It assumes that the supply curve of x will shift to the right in response to the increased demand.
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