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Figure 3-6
-Given the supply and demand curves drawn in Figure 3-6, a technological advance that makes the production of Q more efficient can be expected to push the market clearing price down and the market clearing quantity up.

Question

Use the following to answer questions :
Figure 3-6 
-Given the supply and demand curves drawn in Figure 3-6, a technological advance that makes the production of Q more efficient can be expected to push the market clearing price down and the market clearing quantity up.

Quizplus · Accepted Answer

When production of Q becomes more efficient, it will lower the cost of production and therefore shift the supply curve to the right. This will lead to a lower market clearing price and higher market clearing quantity, as shown by the intersection of the new supply and demand curves.

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