Answer to Question #182597 in Microeconomics for Ishaq Mubarak

Question

Ghana is well noted for cocoa production. With the use of a diagram, explain how a technological advancement in cocoa production can affect supply of cocoa.

Answer 1

Improved technology will lead to an increase in supply, which will be driven by increased efficiency in the processing of cocoa beans. As a result, since demand remains unchanged, the equilibrium price will decrease and the equilibrium quantity will increase.