Any improvement in overall production technology that permits more output to be produced with the same level of inputs causes
A) a movement up the supply curve resulting in both a higher equilibrium price and quantity.
B) a rightward shift of the supply curve so that more is offered at each price.
C) no movement of the supply curve, but a fall in price and a decrease in quantity supplied.
D) a leftward shift of the supply curve so that less is offered for sale at each price.

Question

Quizplus · Accepted Answer

An improvement in production technology leads to an increase in productivity, which in turn leads to a decrease in the cost of production. This enables producers to offer more at each price level, resulting in a rightward shift of the supply curve. As a result, more is offered at each price, leading to an increase in equilibrium quantity, but with the same or lower equilibrium price.

Any Improvement in Overall Production Technology That Permits More Output