Which of the following scenarios best illustrates the concept of the 'Fallacy of Composition' as it applies to the distinction between Microeconomics and Macroeconomics?

A global manufacturer of high-tech semiconductors operates in a highly competitive market. Recently, a major geopolitical conflict has disrupted the supply of a rare earth metal essential for chip production, causing its price to triple. Simultaneously, a global recession has reduced consumer electronics demand by 20%. To survive, the firm considers raising its prices by 10%, but fears losing market share to a competitor with long-term fixed price contracts. Based on this scenario, which statement correctly connects the micro actions to the macro environment?