Innovations that lower production costs or create new products
A) are rare in competitive industries.
B) discourage new firms from entering the industry.
C) often generate short-run economic profits that do not last into the long run.
D) usually generate long-run economic profits for the innovator.

Question

Quizplus · Accepted Answer

Innovations can lead to short-run economic profits due to a temporary competitive advantage, but in the long run, competition erodes these profits as other firms adopt the innovation or new entrants join the market.

Innovations That Lower Production Costs or Create New Products