Final answer:
A change in technology in the long run can lead to adjustments in production processes, shifting the long-run average cost curve and impacting the firm's cost structure. Initially, it can increase profits and market supply, and eventually balance out as new firms enter. The alteration in technology can also affect the size distribution of firms in an industry.
Step-by-step explanation:
A change in technology can signify a long-run adjustment for a firm or industry by altering the production processes in a way that affects the overall cost structure and efficiency. New technological advancements often lead to a shift in the long-run average cost (LRAC) curve. Essentially, a production technology is a mix of labor, capital, and technology that constitutes a method of production.
When technological improvements reduce the costs of production, the LRAC curve shifts downward, indicating that the firm can produce at a lower cost than before. This shift can result in an increased supply curve at the market level. Initially, the existing firms may enjoy higher profits, prompting new firms to enter the market, which in turn increases market supply. Eventually, this increase in supply will drive profits down until they reach a normal level, usually close to zero, completing the long-run adjustment process.
The impact on the size distribution of firms in an industry can also be significant. Technological changes can either enable smaller firms to compete more efficiently by reducing their costs or may require such significant investment that only larger firms can afford them, leading to increased market concentration.