Question

Explain why technological progress will, at best, only temporarily allow a perfectly competitive firm to earn an economic profit

Answer 1

If there is an technological progress, that will lower the cost of the firms and at a given price the firm in the market will be making a profit.

But, as in the perfect market condition, all the firms in the market will have same knowledge and technology, this will spread the new technology among all the members and all the firms will be producing at a lower cost level.

Overall, the market will settle at a lower price and higher level of output in the market.