A Technological Advance That Reduces Firms' Variable Costs Will Lead

question 46

True/False

A technological advance that reduces firms' variable costs will lead to higher profits in the long run of a perfectly competitive industry.

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Definitions:

Contributed Capital

Funds raised by a company in exchange for its shares, representing the equity capital contributed by the shareholders.

Cumulative Preferred Stock

A type of preferred stock where dividends accumulate if not paid in a given period, and must be paid out before common shareholders can receive dividends.

Noncumulative Preferred Stock

A type of preferred stock where dividends are not accumulated if they are not declared.