A perfectly competitive industry is in long-run equilibrium. Some firms in the industry adopt new technology that reduces the average total cost of producing the good. In the long run, the price is ________, firms with the new technology make ________ economic profit, and firms with the old technology ________.

Question

Quizplus · Accepted Answer

In the long run, the price will decrease to the new lower average total cost due to increased efficiency. Firms with the new technology will make zero economic profit as the market adjusts, while firms with the old technology will either have to adopt the new technology to remain competitive or exit the industry.

A Perfectly Competitive Industry Is in Long-Run Equilibrium