Technology reduces the average cost of production,so in the long run
i.perfectly competitive firms produce at a lower average cost.
ii.the market price of the good falls.
iii.firms with older plants either exit the market or adopt the new technology.
A) i only.
B) i and ii.
C) iii only.
D) i and iii.
E) i, ii, and iii.

Question

Quizplus · Accepted Answer

Technology advancements lead to lower production costs, causing competitive firms to produce more efficiently (i). This efficiency drives down the market price (ii), and firms with outdated technology must adapt or exit the market to remain competitive (iii).

Technology Reduces the Average Cost of Production,so in the Long