Cost saving technologies result in an increase in economic profits in both the short run and the long run.

Question

Quizplus · Accepted Answer

In the short run, cost-saving technologies can lead to increased economic profits as firms are able to produce at a lower cost than competitors. However, in the long run, these profits tend to decrease as competitors adopt similar technologies, market prices adjust, and economic profits move toward zero due to perfect competition dynamics.

Cost Saving Technologies Result in an Increase in Economic Profits