If a competitive firm successfully adopts a better production technology ahead of the others, then
A)its product price will become lower than the others'.
B)its average cost will become higher than the others'.
C)its profits will become higher than the others'.
D)its marginal revenue will become higher than the others'.

Question

Quizplus · Accepted Answer

Adopting a better production technology typically allows a firm to produce goods more efficiently, lowering its average costs. This can lead to higher profits because the firm can sell its products at the same market price as competitors but at a lower cost of production. The price doesn't necessarily become lower (A is incorrect because prices are determined by the market in competitive markets), the average cost doesn't become higher (B is incorrect), and marginal revenue doesn't change directly from technology adoption in competitive markets (D is incorrect) since it's determined by the market price.

If a Competitive Firm Successfully Adopts a Better Production Technology