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Assume that a perfectly competitive industry is in long-run equilibrium. Then an improvement in technology reduces the average total cost and the marginal cost of all firms. In the long-run, what happens to price, economic profits, and the number of firms in the industry? Please give an explanation.

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Joshua Stredder
Joshua StredderLv10
28 Sep 2019

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Related questions

Suppose the book-printing industry is competitive and begins in a long-run equilibrium. a. Draw a diagram showing the average total cost, marginal cost, marginal revenue, and supply curve of the typical firm in the industry. b. Hi-Tech Printing Company invents a new process that sharply reduces the cost of printing books. What happens to Hi-Tech’s profits and the price of books in the short run when Hi-Tech’s patent prevents other firms from using the new technology? c. What happens in the long run when the patent expires and other firms are free to use the technology?

29) Which one of the following is not true of a new long-run equilibrium which is the result of a new technology in a perfectly competitive industry? A) Economic profit of each firm remaining in the industry increases. B) Average total cost decreases. C) Industry output increases. D) The equilibrium price falls. E) All firms in the industry use the new technology-

1.) The minimum feasible long-run average cost for firms in a perfectly competitive industry is $58 per unit. IF every firm in the industry currently is producing an output consistent with a long-run equilibrium, calculate the marginal cost incurred by each firm and the market price.

Marginal cost is $___ and market price is $___ .

How I calculate this?

2.) A perfectly competitive increasing cost industry is in long-run equilibrium. Due to a change in tastes and preferences, there is a decrease in demand. Which of the following best describes the effect on the industry?

The price will

A.) decrease, firms will produce more, profits will decrease, and more firms will enter until profit returns to zero.

B.) decrease, firms will produce less, profits will increase, and more firms will enter until profit returns to zero.

C.) decrease, firms will produce less, profits will be below zero, and firms will exit until profit returns to zero.

D.) increase, firms will produce more, profits will increase, and more firms will enter until profit returns to zero.

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