Initially, a Perfectly Competitive Industry That Has 1,000 Firms Is

question 437

Multiple Choice

Initially, a perfectly competitive industry that has 1,000 firms is in long-run equilibrium. Then 100 firms in the industry adopt a new technology that reduces the average cost of producing the good. In the short run, the price ________, firms with the new technology make ________ economic profit, and firms with the old technology ________.

• A) remains the same; zero; incur economic losses
• B) falls; positive; incur economic losses
• C) remains the same; positive; make normal profit
• D) remains the same; positive; incur economic losses

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Definitions:

Inventory

The goods and materials that a business holds for the ultimate goal of resale or production.

Cost of Goods Sold

The immediate expenses connected to the manufacturing of goods a company sells, such as materials and labor.

Corporate Life Cycle

A concept that describes the progression of a company through stages of growth, maturity, and decline or renewal.

Lapse

The expiration or termination of a right, privilege, or policy due to the passage of time or inaction.