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Homework answers / question archive / Assume that Ford Motor Company engineers achieve a revolutionary technological advance in the production process of automobiles
Assume that Ford Motor Company engineers achieve a revolutionary technological advance in the production process of automobiles. Which of the following events would you expect to occur?
A. A movement up along an existing supply curve for Ford automobiles
B. A movement down along an existing supply curve for Ford automobiles
C. A shift inward of the supply curve for Ford automobiles
D. A shift outward of the supply curve for Ford automobiles
E. No change in supply
The correct answer is D. A shift outward of the supply curve for Ford automobiles
Explanation: When there is a technological advancement in the production process of the Ford Motor Company, it will not be able to produce more efficiently. This means that the supply of automobiles will increase without any increase in the prices. And when prices remain the same, and supply increase, it is depicted as a rightward (outward) shift in the supply curve.
