If an Innovation Lowers the Marginal Cost of Production for Firms

question 68

Multiple Choice

If an innovation lowers the marginal cost of production for firms in a competitive industry, then in the long run, the number of firms

• A)increases and firms in the industry make normal profits.
• B)does not change and firms in the industry make profits.
• C)decreases and firms in the industry incur losses.
• D)decreases and firms in the industry make profits.
• E)decreases and firms in the industry make normal profits.

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Definitions:

Howard Johnson's

A chain of hotels, and formerly restaurants, known for its iconic orange roof and mid-century American dining and lodging experience.

Trade Dress

The visual appearance of a product or its packaging that signifies the source of the product to consumers, including features such as shape, color, or design.

Trade Secrets

Confidential business information that provides a competitive edge and is protected from disclosure.

Competitive Advantage

A condition or circumstance that puts a company in a more favorable or superior business position compared to its competitors.