If technological innovations lower the costs of production, what will happen regarding supply and demand?
- Anonymous7 years agoFavorite 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.
- AleconomixtLv 77 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.
- "A"Lv 57 years ago
If costs are lowered, you would have more people that could afford to purchase the products.
Lower cost = higher demand = higher supply.
- Just LifeLv 47 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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- Sipra MLv 67 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.
- audetLv 43 years ago
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