A book printing company operates under zero-profit condition in a competitive market. Suppose this company invents a new production technology which reduce its average total costs in the process of printing. If the new production technology is protected by a patent.
i) What will happen to the price of books and the company’s profit in the short run?
Ii) What will happen to the price of books and the company’s profit when the patent expires?
Discuss with diagram(s)