Refer to the information provided in Figure 12.4 below to answer the question(s) that follow.
Figure 12.4There 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 flow in sector X will eventually
A. generate excess profits.
B. result in excess losses.
C. eliminate all profits.
D. eliminate all losses.
Answer: C
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A) $7.00 B) $5.80 C) $2.50 D) $3.60
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