Assume that the adoption of a new technology costing 8 per year lowers the marginal cost of producing Good X from 7 to 3 . The firm will adopt the new technology if it expects annual profit to increase from 14 to 18.
Indicate whether the statement is true or false
Question 2
The force that leads to zero economic profits for monopolistically competitive firms in the long run is:
a. excess capacity.
b. price wars among firms.
c. new entry.
d. excessive advertising.
