Microeconomics- Producer theory
1. Microeconomics- Producer theory
(Answer both parts together in an essay format)
Part A) Describe what happens in the short run and in the long run to a perfectly competitive firm when new lower cost technologies are introduced. (Assume that these lower technology costs are equivalent to a reduction in fixed costs).
Part B) “In the long run the degree of competition in a market does not matter because technological progress reduces production costs so that consumers always benefit”. To what extent do you agree/disagree?