Assume That the LCD and Plasma Television Sets Industry Is

question 15

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 economic profits temporarily, but in the long run its economic profits will be eliminated as other firms copy the innovation.

---

Definitions:

Market This Month

A snapshot or overview of market activities, trends, and performances for the current month.

Supply Curve

A graphical representation of the quantity of goods that producers are willing to sell at different prices.

Ink

A pigment or dye-based fluid used for writing, printing, or drawing, comprised of various chemical compositions depending on its intended use.

Pens

Writing instruments used for applying ink to a surface, typically paper, for writing or drawing.