Using Two Graphs, Illustrate How a Positive Technological Change in the Market

question 193

Essay

Using two graphs, illustrate how a positive technological change in the market for notebook computers could eliminate short-run economic profit for a firm in that market.On the first graph, use a supply and demand graph to illustrate the positive technological change.On the second graph, use demand, ATC, MC, and MR curves to illustrate the elimination of economic profit resulting from the positive technological change.Explain what is taking place in each graph.

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Definitions:

Invested Assets

Assets held by an entity for earning income, gaining profits, or other benefits, including stocks, bonds, and real estate.

Unit Selling Price

The cost that a customer pays per unit of product purchased.

Total Cost Method

An accounting method used for handling inventory, where the cost of goods sold is determined by adding purchase costs less the ending inventory.

Total Cost Method

An accounting approach where all costs of production, including variable and fixed, are used to value inventory and determine cost of goods sold.