Innovations that lower production costs or create new products
A)are rare in competitive industries.
B)discourage new firms from entering the industry.
C)often generate short-run economic profits that do not last into the long run.
D)usually generate long-run economic profits for the innovator.

Question

Quizplus · Accepted Answer

Innovations can indeed lead to short-run economic profits as they may provide a competitive advantage or meet new market needs. However, these profits often attract competition, which can erode these profits over time, making it difficult to sustain long-run economic profits solely based on the initial innovation.

Innovations That Lower Production Costs or Create New Products