Final answer:
C) Incremental Innovation
Changing a business process to produce the same output at a lower cost is an example of Incremental Innovation, focusing on small improvements and cost reductions within the framework of existing operations.
Step-by-step explanation:
Changing a business process to produce the same level of output at a lower cost is an example of Incremental Innovation. This type of innovation refers to small, gradual changes in a product or process that improve efficiency or reduce costs.
As opposed to Disruptive Innovation, which can reshape industries or create new ones, incremental innovation focuses on enhancements within the existing framework of a business's operations.
Adopting a new technology to cut down production costs is also an incremental step which increases the firm's supply curve and could result in higher short-term profits. This adjustment usually continues until market competition levels the profit margin back to zero due to the increased supply from both existing and new market entrants.
Economies of scale also play a crucial role when firms optimize their scale of production. As output increases, the cost per unit produced typically decreases, which is why larger factories can often produce goods at a lower average cost than their smaller counterparts, similar to the business model of warehouse stores like Costco or Walmart.