How to read this
Two firms use energy and capital in fixed proportions: they cannot substitute. Yet when energy gets dearer, the energy-intensive product gets dearer, consumers switch, and output moves to the capital-intensive firm. Each firm stays on its own ray, while the industry total turns towards capital.
- Press ▶ Notes example, or raise .
- Tick Show what an econometrician sees: aggregate data show substitution that happens inside no firm. It is a change in composition.
Prices
Consumers
The notes' numbers need ; with nobody switches and nothing moves.