Answer to Question #275961 in Microeconomics for ramzan

Question

What will happen to the equilibrium quantity and equilibrium price of renewable

energy resources if energy sector improves the technology?

Answer 1

An improvement in technology tends to reduce the costs of production; cheaper production costs generate an increase in supply due to improved efficiency, which in turn reduces the price, which leads to an increase in demand. So, with improved technology, the equilibrium quantity of renewable resources will increase, while the equilibrium price will decrease due to increased supply that's attributable to cheaper production costs brought by improved technology.