If the prices of productive substitute goods decreased and productive technology improved at the same time, as a result:
A)prices would rise and there would be and an indeterminate effect on quantities exchanged.
B)prices would fall and there would be and an indeterminate effect on quantities exchanged.
C)prices would rise and larger quantities would be exchanged.
D)prices would fall and larger quantities would be exchanged.

Question

If the prices of productive substitute goods decreased and productive technology improved at the same time, as a result:
A)​prices would rise and there would be and an indeterminate effect on quantities exchanged.
B)​prices would fall and there would be and an indeterminate effect on quantities exchanged.
C)​prices would rise and larger quantities would be exchanged.
D)​prices would fall and larger quantities would be exchanged.

Quizplus · Accepted Answer

When the prices of productive substitute goods decrease, consumers will switch over to those substitute goods, resulting in a decrease in demand for the original good. As the productive technology of the original good improves, the cost of production decreases, leading to lower prices. With lower prices and larger quantities of the original good being produced, demand for the good will increase, resulting in larger quantities being exchanged. Therefore, prices will fall and larger quantities will be exchanged.

If the Prices of Productive Substitute Goods Decreased and Productive