There is a technological advance in the production of a good and simultaneously also an increase in the expected future price. Which of the following will happen?

Question

Quizplus · Accepted Answer

Technological improvements typically make production more efficient, leading to a rightward shift in the supply curve, indicating an increase in supply. On the other hand, an increase in the expected future price can lead producers to reduce current supply in anticipation of higher future profits, shifting the supply curve leftward. The net effect on the equilibrium price and quantity depends on the relative magnitudes of these shifts, which cannot be determined without additional information.

There Is a Technological Advance in the Production of a Good