An improvement in technology would result in:
A) upward shifts of MC and reductions in output.
B) upward shifts of MC and increases in output.
C) downward shifts of MC and reductions in output.
D) downward shifts of MC and increases in output.
E) increased quality of the good, but little change in MC.

Question

Quizplus · Accepted Answer

An improvement in technology is likely to lead to a downward shift in marginal cost (MC) due to increased efficiency and productivity. This, in turn, will allow firms to increase output without increasing their costs, resulting in an upward shift in output. Choice D is the only option that captures this relationship between technology, MC, and output.

An Improvement in Technology Would Result In