Technological Change Spreads Through a Perfectly Competitive Market

question 106

Multiple Choice

Technological change spreads through a perfectly competitive market.Choose the statement that is incorrect.

• A)The market price falls and the equilibrium quantity increases.
• B)The technological change brings permanent gains for consumers and producers.
• C)Firms that do not change to the new technology will incur an economic loss and eventually go out of business.
• D)Firms that are quick to adopt to the new technology will make economic profits initially, but in the long run they will make zero economic profit.
• E)Average cost will fall for firms who adopt the new technology.

---

Definitions:

Salvage Value

The estimate of an asset's worth at the end of its useful life.

Average Accounting Return

A financial ratio that measures the net profit of a project or investment as a percentage of its initial cost.

Straight-line Depreciation

A method of allocating the cost of a tangible asset over its useful life in equal yearly amounts.

Net Income

The comprehensive earnings of a corporation after expenses and taxes have been taken away from its revenues.