Several producers in industry A developed an improved technology that reduces the quantity of resources used to produce a given output. Which of the following would be expected?
A) The per-unit costs of production of the firms adopting the technology would increase.
B) In the short run, economic profits would be earned by the earliest firms adopting the technology.
C) Product price would immediately fall to the minimum average total cost of the firms quickly adopting the technology, thus retarding the rate at which firms enter the industry.
D) Producers who adopt the technology will have short-run economic losses.

Question

Quizplus · Accepted Answer

In the short run, firms that adopt the improved technology first can produce at lower costs, allowing them to earn economic profits before other firms adopt the technology and market prices adjust.

Several Producers in Industry a Developed an Improved Technology That