Profit and Technological change Flashcards
1
Q
profit
A
total revenue - total costs
2
Q
normal profit
A
the minimum level of profit required to reward an entrepeneur for taking a risk
3
Q
supernormal profit
A
profit over and above normal profit
4
Q
technological change
A
arises out of inventions and innovations
5
Q
inventions
A
the creation of a product or process
6
Q
innovation
A
new products/production processes that are developed into marketable goods or services
7
Q
Effects of technological change
A
long run average total costs are reduced reflecting dynamic efficiency
- can make some markets more competitive
8
Q
creative destruction
A
firms that have previously enjoyed monopoly power could easily see this eroded by the development of new ‘disruptive’ technologies that create new markets or revolutionise old ones
