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Suppose that a technological advance in production occurs
Suppose that a technological advance in production occurs. In addition, suppose that the number of buyers in the market increases. What would be expected to occur in this market?
A. Both the equilibrium price and equilibrium quantity would increase.
B. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous because it could increase, decrease, or remain the same.
C. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous because it could increase, decrease, or remain the same.
D. The equilibrium price would decrease, but the impact on the amount sold in the market would be ambiguous because it could increase, decrease, or remain the same.
E. The equilibrium price would increase, but the impact on the amount sold in the market would be ambiguous because it could increase, decrease, or remain the same.
Expert Solution
The answer is E. The equilibrium price would increase, but the impact on the amount sold in the market would be ambiguous because it could increase, decrease, or remain the same. This is due to the following factors:
- There is more productivity which translates to the supply curve shifting to the right.
- There is also more buyers which translates to shifting demand to the right.
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