Process innovation is represented as a downward shift in a firm's total product curve and its average total cost curve.

Question

Quizplus · Accepted Answer

Process innovation typically leads to a more efficient production process, which is represented as a downward shift in the firm's average total cost curve, but it does not directly shift the total product curve. The total product curve, which shows the maximum output that can be produced with varying amounts of an input while holding other inputs constant, is primarily affected by changes in technology or inputs, not by process innovation's impact on costs.

Process Innovation Is Represented as a Downward Shift in a Firm's