Technological advance improves productivity in a purely competitive industry. This change will result in a shift:
A. Down of the individual firm's MC curve, causing the market supply curve to shift to the left
B. Down of the individual firm's MC curve, causing the market supply curve to shift to the right
C. Up of the individual firm's MC curve, causing the market supply curve to shift to the left
D. Up of the individual firm's MC curve, causing the market supply curve to shift to the right
B. Down of the individual firm's MC curve, causing the market supply curve to shift to the right
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Which of the following happens when new firms enter a monopolistically competitive market structure?
A) The existing firms face higher demand. B) The existing firms face relatively inelastic demand curves. C) The existing firms earn higher profits. D) The existing firms earn lower profits.
In the market for automobile insurance, adverse selection implies that
A) those who are insured might take greater risks. B) those who are uninsured might take greater risks. C) insured and uninsured alike will take greater risks. D) drivers with greater risks are more likely to buy insurance.