Assume the technology for producing personal computers improves and,at the same time,individuals discover new uses for personal computers so that there is greater utilization of personal computers.Which of the following will happen to equilibrium price and equilibrium quantity?

Question

Quizplus · Accepted Answer

With the improvement in technology for producing personal computers, it becomes easier and cheaper to produce personal computers. As a result, the supply of personal computers will increase, shifting the supply curve to the right. At the same time, as individuals discover new uses for personal computers, the demand for personal computers will increase, shifting the demand curve to the right. The intersection of the new supply and demand curves will result in a higher equilibrium quantity but the equilibrium price cannot be determined without knowing the extent of the shift in the supply and demand curves. Therefore, the best choice is C, which indicates that quantity will increase but price cannot be determined.

Assume the Technology for Producing Personal Computers Improves And,at the Same