Question

If there is technological breakthrough in the production of an absolute necessity, will leas to a lower price and larger quantity produced? Explain

Answer 1

If there is technological breakthrough in the production of an absolute necessity, will lead to a lower price and larger quantity produced

Due to technological advancement in the production process, the similar level of input resources will yield the greater outputs or the reduced processing time can have the greater number of units to be produced in the same time. This increased output or reduced processing time will help the manufacturer to improve their production level and therefore the quantity produced in a certain time will be increased.

As with the same level of outputs, the products are produced in larger quantities, thus due to economies of scale, the production cost of each unit will be decreased as a result this reduction in the cost of production can be passed to the consumer by decreasing the per unit price and therefore the demand can be improved which can help the firm to increase its revenue.