Imagine a firm in a competitive market comes up with a new production method, which halves its marginal cost at all levels of Q. Fixed costs are unaffected. Which of the following statements are true?

Question

Answer

The firm would extract an innovation rent from selling at the market price with lower costs.

Answer

The firm's point of minimum AC would be a higher level of Q.

Answer

The firm's AC at all levels of Q would be lower.

Answer

The innovation would immediately cause the market price to drop.

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Imagine a firm in a competitive market comes up with a new production method, wh...

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