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 advancements typically reduce the costs of production, which lowers the marginal cost (MC) for firms. This makes it cheaper for them to produce each additional unit, leading to an increase in supply as firms are willing and able to produce more at each price level. Hence, the market supply curve shifts to the right.

Technological Advance Improves Productivity in a Purely Competitive Industry