Question
Explain effect of technological changes on supply of a product.
✓
Answer
Case I: Technological Progress when there is technological progress in the firm, then cost of production will decrease, which leads to increase in the profit margin of the firm and thereby shifts the supply curve shifts rightward as shown below:
Case II: Outdated Technology Supply of those goods which are being produced with old and inferior technology causing increase in cost of production will decrease the total output and shift the supply curve to the left.
Case II: Outdated Technology Supply of those goods which are being produced with old and inferior technology causing increase in cost of production will decrease the total output and shift the supply curve to the left.
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