Suppose that there is an improvement in technology in the market for iPhones. Which of the following is TRUE?
A)Supply will increase and the market clearing price will fall.
B)Supply will increase and the market clearing price will rise.
C)Demand will increase and the market clearing price will rise.
D)Demand will increase and the market clearing price will fall.

Question

Quizplus · Accepted Answer

If there is an improvement in technology in the market for iPhones, this means that the cost of producing iPhones has decreased. As a result, the supply of iPhones will increase. With the increase in supply, the market clearing price will fall as there are now more iPhones available at a lower cost of production. Therefore, option A is the correct answer.

Suppose That There Is an Improvement in Technology in the Market