If a firm develops better methods of producing a product, then this process innovation can be expected to result in a(n)
A)upward shift in both the total product and average cost curves.
B)downward shift in both the total product and average cost curves.
C)downward shift in the total product curve and an upward shift in the average cost curve.
D)upward shift in the total product curve and a downward shift in the average cost curve.

Question

Quizplus · Accepted Answer

Process innovation typically leads to more efficient production methods, which can increase the total output (total product curve shifts upward) and reduce the cost per unit of output (average cost curve shifts downward).

If a Firm Develops Better Methods of Producing a Product