Question

In: Economics

An improvement in production technology will:

An improvement in production technology will:

A. increase equilibrium price.

B. shift the supply curve to the left.

C. shift the supply curve to the right.

D. shift the demand curve to the left.

Solutions

Expert Solution

The improvement in production technology leads to an increase in production while the cost of production remains the same; that is, the average cost of production decreases.

When the average cost of production decreases, it is profitable for firms to sell more output; therefore, firms increase production.

When production increases, the supply curve shifts to the right.


Option C is the correct option

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