In the Figure Given Below, Panel a Represents Preexisting Firms

question 13

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 .Which of the following can be concluded about the innovative firm which reduces its marginal and average cost by using the new technology?

• A)The equilibrium output produced by this firm will increase.
• B)The equilibrium output produced by this firm will decrease.
• C)This firm will offer its produce at a price below P0.
• D)This firm will offer its produce at a price above P0.

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Definitions:

Bank Loan

A sum of money borrowed from a bank that must be repaid with interest over a predetermined period.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from revenue.

Revenues

The income generated from normal business operations, calculated by multiplying the price of goods or services by the quantity sold.

Dividends Payable

A liability account in a company's balance sheet indicating the amount in dividends that the company owes to its shareholders but has not yet paid out.