Question

Technological dissemination or diffusion (i.e., the spread of new technologies through the industry) in a price taker market tends to
a. stop
b. take place at a rapid rate
c. take place at a slow rate
d. be constantly interrupted by barriers to entry and barriers to diffusion
e. be illegal under U.S. antitrust laws
Group of answer choices

2.At equilibrium in an oligopoly, the size of economic profits will remain high if
a. there are no barriers to entry
b. There are strong barriers to entry
c. There are diseconomies of scale
d. The law of Diminishing Returns applies
e. The product has a negative income elasticity

Answer 1

Ans 1. b) Take place at a rapid rate.

Since everyone in the industry will earn zero economic profit in a price taker firm, the new technological innovation gets diffused very rapidly so that the economic profit becomes zero.

2. b)There are strong barriers of entry.

When there are strong barriers to entry, the firms in an industry will be able to earn positive economic profits and will not be vigilant of new firms joining and taking their share of economic profits.