A Successful Process Innovation Can Be Expected to Lead to

question 49

Multiple Choice

A successful process innovation can be expected to lead to

• A) an upward shift of the MC and AC curves which will lower output and raise the price of the product.
• B) an upward shift of the MC and AC curves which will raise output and lower the price of the product.
• C) a downward shift of the MC and AC curves which will lower output and raise the price of the product.
• D) a downward shift of the MC and AC curves which will raise output and lower the price of the product.
• E) a downward shift of the MC and AC curves which will leave unchanged the output and price of the product.

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Definitions:

Variable Factor

In economics, an input in the production process that can be adjusted in the short run to change the quantity of output.

Fixed Factors

Inputs in the production process that cannot be easily increased or decreased in a short period of time.

Constant Returns To Scale

a situation in production where increasing all inputs by the same percentage results in output increasing by that same percentage.

Long-run Profits

The potential earnings of a business over a period long enough for all inputs to be adjusted, considering the firm's ability to enter or exit markets.