Firm X and Firm Y Compete Within the Same Industry

question 25

Multiple Choice

Firm X and Firm Y compete within the same industry.Firm X manufactures its product using large amounts of direct labour.Firm Y has replaced direct labour with investment in machinery.Projected sales for both firms are 15% less than in the previous year.What will be the projected profits for Firm X compared to Firm Y?

• A)Firm X will lose more profit than Firm Y.
• B)Firm Y will lose more profit than Firm X.
• C)Firm X and Firm Y will lose the same amount of profit.
• D)Neither Firm X nor Firm Y will lose profit.

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Definitions:

Criminal Law

The body of laws that involve the rights and responsibilities an individual has with respect to the public as a whole.

Federal Law

Laws passed by the national government that are supreme over state laws and apply throughout the entire country.

Contract Modification

Any change or alteration to the terms of a contract agreed upon by all parties involved.

Consideration

A legal concept referring to something of value given by both parties to a contract that induces them to enter into the agreement to exchange mutual performances.