Question
Suppose an industry consists of one firm with superior technology and infinitely many identical potential entrants. Which statement is correct about the long-run competitive equilibrium?
Suppose an industry consists of one firm with superior technology and infinitely many identical potential entrants. Which statement is correct about the long-run competitive equilibrium? (When the demand curve shifts, always compare the long-run equilibrium with the original demand curve and the long-run equilibrium with the new demand curve. Also, assume that the demand is always sufficiently high to support more than two firms in the market.) A. The production level of the firm with superior technology stays the same even if the demand curve shifts upwards. B. The profit of the firm with superior technology increases if the demand curve shifts upwards. C. The profit of a potential entrant with identical technology increases if the demand curve shifts upwards. D. The equilibrium price increases when the demand curve shifts up.
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