Firm's Response to Supply Chain Shocks

A domestic furniture company relies heavily on imported lumber. A global shortage causes the price of this lumber to double overnight. Assuming the level of competition among furniture companies in the domestic market does not change, what is the most likely effect on this company's profit share (the fraction of its revenue kept as profit)?

If a domestic car manufacturer faces a significant and sustained increase in the price of imported steel, its profit share will inevitably decrease, assuming the number of competing car manufacturers remains the same.

Profit Share and Input Costs

Analyzing Firm Pricing Strategy and Profit Distribution