The Development of New Technology Reduces the Cost of Producing

question 246

Multiple Choice

The development of new technology reduces the cost of producing calculators.In addition, assume that consumers have cut back on their scheduled purchases in anticipation of further cost-saving developments.As a result, we can expect

• A)a decrease in price but no predictable change in output.
• B)a decrease in output but no predictable change in price.
• C)an increase in output but no predictable change in price.
• D)a predictable decrease in both output and price.

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Definitions:

Long-Run Adjustment

The process of economic agents fully adapting to changes in conditions or policies over time, reaching a new equilibrium.

Economic Profits

The difference between total revenue and total costs, including both explicit and implicit costs, representing the additional amount earned beyond the next best alternative.

Economies of Scale

Cost advantages that a business can achieve by increasing the scale of production, leading to a lower cost per unit of output.

Economic Profit

The difference between a firm’s total revenue and its total costs, including both explicit and implicit costs.