APFIVE Technology and Average Total Cost
How does an improvement in technology affect a perfectly competitive firm’s average total cost (ATC)?
A
ATC would likely decrease due to lower production costs
B
ATC would likely increase due to higher spending on new technology initially outweighing savings from increased productivity
C
The effect on ATC cannot be determined unless we know how much prices fall with increased market supply
D
ATC would remain unchanged as only productivity is affected by technology, not costs
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