Technological advance improves productivity in a purely competitive industry. This change will result in a shift
A) down of the individual firm's MC curve, causing the market supply curve to shift to the left.
B) down of the individual firm's MC curve, causing the market supply curve to shift to the right.
C) up of the individual firm's MC curve, causing the market supply curve to shift to the left.
D) up of the individual firm's MC curve, causing the market supply curve to shift to the right.

Question

Quizplus · Accepted Answer

Technological advance improves productivity, which decreases the marginal cost (MC) curve for the individual firms in the industry. As a result, the firms are able to produce more output at a lower cost. This shift to a lower MC curve leads to a shift of the market supply curve to the right, as the industry can now supply a greater quantity of output at each price level. Therefore, option B is the correct answer.

Technological Advance Improves Productivity in a Purely Competitive Industry