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Ahmad asked in Social ScienceEconomics · 7 years ago

If technological innovations lower the costs of production, what will happen regarding supply and demand?

6 Answers

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  • Anonymous
    7 years ago
    Favorite Answer

    The production function will shift upward,while AC,AVC,MC and AFC will shift downward. AS will shift to the right. That will cause price to rise,while quantity will increase.

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  • 7 years ago

    Supply curve will shift to the right so new equilibrium will be sought with sustained demand curve and that will be of lower price /higher quantity point so demand will move down ( ie more Q) along the demand curve.

    Q more, price less - consumer surplus will increase.

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  • "A"
    Lv 5
    7 years ago

    If costs are lowered, you would have more people that could afford to purchase the products.

    Lower cost = higher demand = higher supply.

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  • 7 years ago

    nothing to demand, but marginal product of labor would increase and aggregate supply curve will cover a greater region of output in market than before..

    This creates economic growth in long run.

    Source(s): mind
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  • 7 years ago

    Cost reducing Innovation :

    * consumer will get same or better thing at lower price.

    * Lower price will bring more consumer.

    * Lower price invention also work as a barrier to entry for the new producers ( unable to produce at a lower cost).

    * It will also give more profit margin.

    * It will give birth to monopoly - due to less competition,patent right etc.

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  • audet
    Lv 4
    3 years ago

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