1. In a perfectly competitive industry, the long-run equilibrium price is $12. What happens to the long-run equilibrium price if a technological innovation lowers production costs?
A The long-run equilibrium price will rise above $12. B The long-run equilibrium price will initially rise but then return to $12.
C The long-run equilibrium price will fall below $12.
D The long-run equilibrium price will initially fall but then return to $12.
2 .A perfectly competitive industry begins in long-run equilibrium, but a technological innovation lowers the firms' costs. After the market adjusts, relative to the original equilibrium:
A the price charged by the firms decreases, the quantity produced by a firm increases, and the market quantity increases.
B the price charged by the firms increases, the quantity produced by a firm increases, and the market quantity increases.
C the price charged by the firms decreases, the quantity produced by a firm remains the same, and the market quantity decreases.
D the price charged by the firms remains the same, the quantity produced by a firm remains the same, and the market quantity decreases.
| 1. | In a perfectly competitive industry, the long-run equilibrium price is $12. What happens to the long-run equilibrium price if a technological innovation lowers production costs?
2 .A perfectly competitive industry begins in long-run equilibrium, but a technological innovation lowers the firms' costs. After the market adjusts, relative to the original equilibrium: A the price charged by the firms decreases, the quantity produced by a firm increases, and the market quantity increases. B the price charged by the firms increases, the quantity produced by a firm increases, and the market quantity increases. C the price charged by the firms decreases, the quantity produced by a firm remains the same, and the market quantity decreases. D the price charged by the firms remains the same, the quantity produced by a firm remains the same, and the market quantity decreases. |
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