Question

if technology improves in producing computers, what will happen to the eualibrillim price and quantity of computers?

(A) Both the equilibrium price and quantity will increase.
(B) Both the equilibrium price and quantity will decrease.
(C) The equilibrium price will increase and the equilibrium quantity will decrease.
(D) the equilibrium price will decrease and the equilibrium quantity will increase

Answer 1

Answer:

(D) the equilibrium price will decrease and the equilibrium quantity will increase

Explanation:

Since the technology improvement will lead to a decrease in the cost of production and an increase in the ability to produce computers. The firm can produce more computers at a lower cost so there are more computers in the market. The supply curve shifts right. The consumer demand more computer as a result of the lower price. In conclusion, the equilibrium price will decrease, the equilibrium quantity will increase.