When Plasma Television Sets Were First Introduced Prices Were High

question 267

Multiple Choice

When plasma television sets were first introduced prices were high and few firms were in the market.Later, economic profits attracted new firms and the price of plasma televisions fell.This example illustrates

• A)a decreasing-cost industry.
• B)that consumers receive this new technology "free of charge" in the sense that they only have to pay a price for plasma televisions equal to the lowest production cost.
• C)an industry with a low minimum efficient scale.
• D)how fickle consumer demands are.

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Definitions:

Output

The amount of products or services generated by a company, sector, or economic system within a specific timeframe.

Constant Returns

Refers to a situation in production where increasing the inputs by a certain factor results in output increasing by the same factor.

Production Functions

A mathematical expression that describes the relationship between inputs and the maximum output that can be produced with those inputs.

Scale

The size of a business or operation, which can impact its production cost, efficiency, and ability to compete in the market.