Assume That the LCD and Plasma Television Set Industry Is

question 208

Multiple Choice

Assume that the LCD and plasma television set industry is perfectly competitive.Suppose a producer develops a successful innovation that enables it to lower its cost of production.What happens in the short run and in the long run?

• A) Initially, the firm will be able to increase its profit significantly, but in the long run its profits will still be greater than zero but lower than its short-run profits because other firms would also innovate.
• B) The firm will probably incur losses temporarily because of the high cost of the innovation, but in the long run it will start earning positive profits.
• C) This firm will be able to earn above normal profits indefinitely if it obtains a patent for its innovation.
• D) The firm will be able to increase its profits temporarily, but in the long run its profits will be eliminated as other firms copy the innovation.

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Definitions:

Contracture

The permanent tightening of muscles, tendons, skin, and other tissues, leading to decreased range of motion and mobility.

Skeletal Muscle Tissue

A type of muscle tissue that is attached to bones, responsible for voluntary movements of the body parts.

Tendon

A flexible but inelastic cord of strong fibrous collagen tissue attaching a muscle to a bone.

Fibromyalgia

A chronic disorder characterized by widespread musculoskeletal pain, fatigue, and tender points.