A new technology is developed for producing microwave ovens that reduces production costs by 10%. Which of the following is the most likely consequence of this technological change?
A) Firms will continue to operate efficiently as long as no firm adopts this new technology.
B) Firms must adopt this new technology to remain efficient.
C) This new technology will not affect efficiency, but it will change the equilibrium price and quantity for this industry.
D) If firms do not adopt this new technology, then the economy will remain in general equilibrium, because firms will not change their price and output decisions.

Question

Quizplus · Accepted Answer

Firms must adopt the new technology to remain efficient because it reduces production costs, allowing them to produce the same amount of goods at a lower cost or more goods at the same cost, thus staying competitive in the market.

A New Technology Is Developed for Producing Microwave Ovens That