If there is a technological advance in the production of paper at the same time consumer income increases (assume paper is a normal good),what will happen in the market for paper?
A)Price will increase,quantity will decrease
B)Price will increase,quantity will increase
C)Price will decrease,quantity will decrease
D)Price will decrease,quantity will increase
E)The new equilibrium price and quantity can not be determined

Question

Quizplus · Accepted Answer

Technological advances increase supply, which tends to lower prices and increase quantity. An increase in consumer income increases demand, which tends to raise prices and increase quantity. The net effect on price is indeterminate without knowing the relative magnitudes of the shifts, but quantity will increase.

If There Is a Technological Advance in the Production of Paper