Answer to Question #153150 in Economics for Arran

Question

Describe a technology that has recently been implemented or is under development;
state whether this technology affects the demand or the supply for those shoes. Using
an appropriate diagram, explain how this has affected a firm’s cost, production, and
pricing decisions.

Answer 1

When a firm discovers a new technology that allows it to produce at a lower cost, the supply curve will shift to the right as well. A technological improvement that reduces costs of production will shift supply to the right, causing a greater quantity to be produced at any given price.

For example, digital monitoring at the production site allows the company to attain more control over the material flows and reduce costs. This provides and opportunity to produce the same amount of goods at lower costs and shifts the supply curve to the right.