consider-a-scenario-where-a-new-technology-reduces-production-costs-supply-shift

Question

Consider a scenario where a new technology reduces production costs (supply shifts right) and consumer preferences shift towards a product (demand shifts right). What is the likely impact on the market?

Accepted Answer

Equilibrium price is ambiguous, and equilibrium quantity increases.

Answer

Equilibrium price decreases, and equilibrium quantity is ambiguous.

Answer

Equilibrium price increases, and equilibrium quantity is ambiguous.

Answer

Both equilibrium price and quantity decrease.