Supply curve – technological change An improvement in production technology will: Velg ett alternativ: shift the supply curve to the right. shift the supply curve to the left. shift the demand curve to the left. increase equilibrium price.
The correct answer and explanation is :
Correct answer: shift the supply curve to the right.
Explanation:
A supply curve shows the relationship between the price of a good and the quantity that producers are willing and able to supply at various prices, holding other factors constant. One of the key non-price factors that influence supply is technology.
When there is an improvement in production technology, it typically means that firms can produce more output with the same amount of inputs or produce the same output at a lower cost. This technological advancement increases production efficiency.
For example, imagine a bakery that adopts a new oven that bakes bread twice as fast using the same amount of energy and labor. The bakery can now produce more loaves in the same amount of time and at a lower cost per loaf. As a result, the bakery (and other similar firms in the industry) is willing and able to supply more bread at every price level.
This scenario results in a rightward shift of the supply curve. A rightward shift means that, at each price, a greater quantity is supplied. It is important to note that this is different from a movement along the supply curve, which would result from a change in the price of the good itself. Instead, technological change alters the entire relationship between price and quantity supplied.
Contrary to some misconceptions:
- Technological improvements do not shift the demand curve—consumer preferences and behaviors are not directly affected by production efficiency.
- A rightward shift in the supply curve usually leads to lower equilibrium prices, not higher, assuming demand remains constant.
In conclusion, technological improvements enhance production efficiency and lower costs, thereby increasing supply and shifting the supply curve to the right.