Consider the Following Statements When Answering This Question

question 28

Multiple Choice

Consider the following statements when answering this question. I. Investment in new technology generates learning by doing.
II) Economies of scale cannot shift the long-run average cost curve down, whereas learning by doing can.

• A) I is true, and II is false.
• B) I is false, and II is true.
• C) Both I and II are true.
• D) Both I and II are false.

---

Definitions:

Externalities

Financial outcomes or repercussions that impact third parties who are not directly involved; these can be positive or negative.

Invisible Hand

A term coined by Adam Smith to describe the self-regulating nature of the marketplace in adjusting supply and demand autonomously.

Marketplace

A physical or digital venue where buyers and sellers come together to exchange goods, services, or information.

Marginal Buyer

The consumer who might leave the market if the price was any higher, indicating their participation is sensitive to price changes.