What occurs when a new technology makes another one obsolete

Assignment Help Business Economics

Reference no: EM135389

Explain what occurs when a new technology makes another one obsolete in terms of economic profit. Consider firm A to be an existing firm using the old technology. Firm B is the new firm with the new technology. Firm A earned positive profits for years, but with the entrance of Firm B, Firm As goods and services are no longer desired.

Assume that you are in the business of building houses. You have analyzed the market carefully, and you know that at a price of $120,000, you will sell 800 houses per year. In addition, you know that at any price above $120,000, no one will buy your houses because the government provides equal-quality houses to anyone who wants one at $120,000. You know that for every $20,000 you lower your price, you will be able to sell an additional 200 units. For example, at a price of $100,000, you can sell 1,000 houses, at a price of $80,000, you can sell 1,200 houses, and so on.

Reference no: EM135389

Questions Cloud

Business owner making final decision of international aspect : As a business owner making a final decision regarding the international aspects of a business decision, you may decide to set up a table with the risks and weigh their relative importance against the rate of return you foresee

Factors that affect pay differentials : What are the factors that affect pay differentials? How does each factor increase or decrease relative wages?

Prepare an invoice : How do you take a known dollar value such as $240.00, back out the sales taxes from the known values using the States sales tax

Describe a skimming price and a penetration price : Describe a skimming price and a penetration price, and advise them whether they should charge a skimming price or a penetration price, with supportive reasoning for and against each pricing alternative.

What occurs when a new technology makes another one obsolete : Explain what occurs when a new technology makes another one obsolete in terms of economic profit.

How can 2 countries both be better off as a result of trade : How can two countries both be better off as a result of trade? How can tariffs protect U.S. jobs? Do tariffs lead to a net increase in jobs?

Write an e-business plan for an e-commerce site : You are required to write an e-business plan for an e-commerce site and specify the necessary system requirements to develop it.

China has continued to lag in information technologies : China has continued to lag well behind the rest of the world in information technologies

User Account

All Pages