Reading 18: Perfect Competition - LOS d, (Part 2) ～ Q1-3

答案和详解如下：

1.In the long-run, after all firms in a perfectly competitive industry have adopted new technology, the:

A)   price will be set where average variable cost is equal to marginal revenue.

B)   price will equal minimum average total cost.

C)   individual firm supply will decrease as the cost of implementing technology increases.

D)   individual firm supply will increase as demand decreases.

The correct answer was B)

After some firms in an industry adopt a technological change, the existing firms that use the old technology will experience losses and either adopt the technology or exit the industry. Long-run equilibrium with price equal to minimum average total cost for the new technology will be established.

2.A technology that all of the firms in a perfectly competitive industry are using in their production process has been banned by new legislation. What will most likely be the effect if these firms stop using this technology?

A)   The quantity that the industry will supply at a given price will be reduced.

B)   Firms will adopt a different technology that reduces their costs of production.

C)   The number of firms in the industry will increase.

D)   Profit will no longer be maximized at the level of output where marginal cost is equal to the market price.

The correct answer was A)

If all the firms in a competitive industry have adopted a technology for production, it is presumably the technology that minimizes their production costs . If that technology is outlawed, firms will have to revert to the second-best technology, which will increase their costs of production. This is represented by a shift to the left in the industry supply curve. At each price level, the quantity supplied will be less than before.

Just as a technological improvement will cause firms that adopt it early to earn economic profits that attract new entrants to the industry, prohibition of the cost-minimizing technology will cause economic losses and typically force some firms to exit the industry. Under perfect competition, profit is always maximized at the level of output where marginal cost equals the market price. The state of technology is one factor that determines the level of output at which this occurs.

3.Which of the following is the most likely result of a technological improvement in a perfectly competitive industry?

A)   Individual firms’ supply curves shift to the left.

B)   The industry supply curve shifts to the right.

C)   The costs for individual firms increase.

D)   Individual firms are willing to supply less of a product at a given price.

The correct answer was B)

When individual firms implement technological change, their costs decline and their supply (cost) curve shifts to the right. At the lower costs, firms are willing to supply a given quantity at a reduced price. The lower cost structure for the individual firms shifts the industry supply curve to the right.