Author Question: A new technology is developed for producing microwave ovens that reduces production costs by 10%. ... (Read 35 times)

Mr3Hunna · **on:** Apr 19, 2019

Question 1

Because most people prefer smartphones to flip phones, firms can improve efficiency by

◦ stopping production of flip phones and starting production of smartphones.
◦ starting production of flip phones and stopping production of smartphones.
◦ increasing production of both flip phones and smartphones.
◦ stopping production of both flip phones and smartphones.

Question 2

A new technology is developed for producing microwave ovens that reduces production costs by 10%. Which of the following is the most likely consequence of this technological change?

◦ Firms will continue to operate efficiently as long as no firm adopts this new technology.
◦ Firms must adopt this new technology to remain efficient.
◦ This new technology will not affect efficiency, but it will change the equilibrium price and quantity for this industry.
◦ If firms do not adopt this new technology, then the economy will remain in general equilibrium, because firms will not change their price and output decisions.

Jevvish · **Reply #1 on:** Apr 19, 2019

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