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rado202 rado202
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2 years ago
Suppose a perfectly competitive industry is in long-run equilibrium. A new one-time cost-saving technology (which is freely available) is then developed and new plants are built. Eventually, a new long-run equilibrium will be established where

▸ all plants continue to operate until they are physically worn out as long as price is greater than the firm's average variable cost.

▸ all plants use the new technology, and market output will be higher and price will be lower.

▸ high-cost and low-cost firms exist side by side and market output will be higher.

▸ the industry supply curve has shifted to the left and price and output are both higher.

▸ new plants employ the new technology, but existing plants continue to produce as long as they cover their fixed costs.
Textbook 
Microeconomics

Microeconomics


Edition: 17th
Author:
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dhk72dhk72
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2 years ago
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rado202 Author
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2 years ago
You make an excellent tutor!
shimyshiguy
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Yesterday
Thank you, thank you, thank you!
jamiebonf99
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2 hours ago
Smart ... Thanks!
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