A manager invests $400,000 in a technology that should reduce the overall costs of production.The company managed to reduce their cost per unit from $2 to $1.85.All else equal,if the firm continues its production in the same economic environment,the firm's economic profits should

Question

​A manager invests $400,000 in a technology that should reduce the overall costs of production.The company managed to reduce their cost per unit from $2 to $1.85.All else equal,if the firm continues its production in the same economic environment,the firm's economic profits should

Quizplus · Accepted Answer

The reduction in cost per unit from $2 to $1.85, assuming all else remains equal, means the firm will save on production costs for each unit produced. Therefore, as the firm produces more units, these savings accumulate, leading to an increase in economic profits if the output is high enough to offset the initial $400,000 investment in technology.

​A Manager Invests $400,000 in a Technology That Should Reduce

A Manager Invests $400,000 in a Technology That Should Reduce