ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Technological progress is an important determinant of supply of goods by a firm. Technological improvement tends to lower the cost of production since better technology facilitates higher output with the same inputs. Accordingly, the producer is willing to supply more at the existing price.

Detailed explanation-2: -Technology leads to an increase in the efficiency of the production process which results in the shifting of the supply curve to the right. With decreasing cost of production more and more customers will be demanding the product. Also read: Price Elasticity of Supply.

Detailed explanation-3: -Improved productivity and efficiency due to technological change, have a positive effect on the cost of production. More productivity means more output per input and more efficiency means that the output is achieved with less cost of production. Hence, the overall cost of production decreases.

Detailed explanation-4: -Improvement in technology reduces the cost of production per unit and increases the profit margin of producers. Hence the supply increases and shifts the curve to the right. Was this answer helpful?