Assume that an economy producing two products, skateboards and in-line skates, i

Question

Assume that an economy producing two products, skateboards and in-line skates, is initially in equilibrium, and that skateboards and in-line skates are substitutes. If consumer preferences shift away from skateboards and toward in-line skates, which of the following will NOT occur? (A)In the short run, firms producing skateboards will incur losses. (B)In the short run, firms producing in-line skates will earn a profit (C)Additional capital will begin to flow into in-line skates production in the long run (D)Additional capital will begin to flow into skateboard production in the long run

Explanation / Answer

Assume that an economy producing two products, skateboards and in-line skates, is initially in equilibrium, and that skateboards and in-line skates are substitutes. If consumer preferences shift away from skateboards and toward in-line skates, which of the following will NOT occur? Additional capital will begin to flow into skateboard production in the long run is correct so it is (D)

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---