Suppose that a technological advancement substantially reduces the cost of producing cheese.We would predict that the equilibrium quantity of cheese will ________ and the equilibrium price of cheese will ________.

Question

Quizplus · Accepted Answer

A technological advancement that reduces the cost of producing cheese would lead to an increase in the supply of cheese. This increase in supply, assuming demand remains constant, would result in a higher equilibrium quantity (as more cheese is available at every price level) and a lower equilibrium price (as suppliers are willing to accept lower prices to sell the increased quantity of cheese).

Suppose That a Technological Advancement Substantially Reduces the Cost of Producing