A technological improvement in the production of good A
A)decreases the supply of A.
B)increases the demand for A.
C)decreases the equilibrium price of A and decreases the equilibrium quantity.
D)decreases the quantity demanded of A.
E)increases the supply of A.

Question

Quizplus · Accepted Answer

A technological improvement in production leads to an increase in efficiency and a decrease in the cost of producing good A. This leads to an increase in the supply of good A since producers can produce more units at a lower cost. As a result, the equilibrium price of A decreases, and the equilibrium quantity increases to meet the new higher supply.

A Technological Improvement in the Production of Good a