In perfect competition, innovation is a means for a firm to
A) exit the market
B) establish brand loyalty
C) shift the ATC and MC curves upward
D) generate short-run economic profit
E) shift the market supply to the left

Question

Quizplus · Accepted Answer

In perfect competition, innovation allows a firm to lower costs or create a better product, thus potentially generating short-run economic profits before other firms can imitate the innovation and erode these profits.

In Perfect Competition, Innovation Is a Means for a Firm