Assume That the LCD and Plasma Television Sets Industry Is

question 174

Multiple Choice

Assume that the LCD and plasma television sets industry is perfectly competitive. Suppose a producer develops a successful innovation that enables it to lower its cost of production. What happens in the short run and in the long run?

• A) Initially, the firm will be able to increase its profit significantly, but in the long run its profits will still be greater than zero but lower than its short-run profits because other firms would also innovate.
• B) The firm will probably incur losses temporarily because of the high cost of the innovation, but in the long run it will start earning positive profits.
• C) This firm will be able to earn above normal profits indefinitely if it obtains a patent for its innovation.
• D) The firm will be able to increase its profits temporarily, but in the long run its profits will be eliminated as other firms copy the innovation.

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Definitions:

Primary Emotions

Emotions that are present in humans and other animals, and emerge early in life; examples are joy, anger, sadness, fear, and disgust.

Interest

The feeling of wanting to learn more about something or to be involved in something; also refers to a charge for borrowing money.

Self-Conscious Emotions

Emotions that require self-awareness, especially consciousness and a sense of “me”; examples include jealousy, empathy, and embarrassment.

Cognitive Reversals

The ability to switch perspectives or understanding that actions can be undone mentally, an important part of cognitive development.