In the Figure Given Below, Panel a Represents Preexisting Firms

question 10

Multiple Choice

In the figure given below, Panel A represents preexisting firms which are in long run equilibrium at price P₀ and output q₀.MC and AC represents the marginal cost and the average cost of the preexisting firms.Panel B represents a market where every seller has the smallest ability to affect prices.The market is in equilibrium at price P₀ and output Q shown by the intersection of the long-run supply curve (LRS) and market demand (D) .



-Refer to Figure .If a preexisting firm adopts a new cost effective technology (which reduces production costs) .Which of the following changes will be observed?

• A)The price level in the market will shift upward.
• B)The market demand curve will shift to the right.
• C)The LRS curve will shift upward.
• D)The MC and AC curves of the innovative firm will shift downward.

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Definitions:

Sales Promotion

Direct inducements offering added value or some other incentive for buyers to enter into an exchange.