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a. How can technological advance result in creative destruction?

a. How can technological advance result in creative destruction? 

Assume that a firm can produce product A, product B, or product C with the resources it currently employs. These resources cost the firm a total of $100 per week. Assume, for the purposes of this problem, that the firm's costs cannot be changed. The market prices and the quantities of A, B, and C these resources can produce are given below. 

Product             Market price                   Output                                 Profit   

A                       $10.00                               6                                         $_____

B                      5.00                                19                                          _____

 C                   1.50                                   100                                          _____      

b.)Compute the firm's profit when it produces A, B, or C and enter these data in the table.

c.)Which product will the firm produce?

d.)Suppose the quantity of product B the firm was able to produce with the same amount of inputs now rose to 25. Which product will the firm now produce?

e.)As a result of the rise in quantity of product B to 25 that each firm can produce, what will happen to the number of firms producing product B? 

Posted in Economics, asked by fifi, 6 years ago. 3234 hits.
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