Question $4$

$3$ pts

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. The projected sales for both firms are $10\%$ more than in the sales in the prior year. Which statement regarding projected profits is true? $q,$

Firm $Y$ will report higher percentage of profit increase than Firm $x.q,$

Neither Firm $x$ or $Y$ will report profit increase.

The two firms will report the same percentage of profit increase.

Firm $Y$ will report lower percentage of profit increase than Firm $x.$