If a New Production Process Is Developed That Allows Firms

question 228

Multiple Choice

If a new production process is developed that allows firms to produce the same output with fewer inputs,then the prices of the inputs ________.

• A) will rise due to increased supply of the inputs
• B) may rise due to increased production by existing firms and new firms' entry
• C) will fall due to increased demand for the inputs
• D) may fall due to decreased production by existing firms and/or exit

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Definitions:

Violates WARP

Refers to a consumer's choices that contradict the Weak Axiom of Revealed Preference, indicating inconsistencies in preference orderings.

Bundle

A combination of various goods and services that a consumer can choose to consume, given their income and preferences.

Entertainment

Activities, performances, or media produced to provide enjoyment and amusement to individuals or groups.

Subsidy

is financial assistance provided by the government to individuals or groups to support an economic activity deemed beneficial.