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Firm X and Firm Y are competitors within the same industry. Firm X produces its product using large amounts of direct labor. Firm Y has
Firm X and Firm Y are competitors within the same industry. Firm X produces its product using large amounts of direct labor. Firm Y has replaced direct labor with investment in machinery. Projected sales for both firms are 15% less than in the prior year. Which statement regarding projected profits is true?
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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