An improvement in production technology will most likely:

• A. raise the equilibrium price of the final good
• B. increase the productivity of factors of production
• C. decrease the availability of natural resources
• D. reduce the efficiency of labor and capital

Answer: (B)

Verified step by step guidance

1. Understand that an improvement in production technology means that firms can produce more output with the same amount of inputs, effectively increasing productivity.
2. Recall that increased productivity shifts the supply curve to the right because producers can supply more goods at every price level.
3. Analyze the effect on equilibrium: with supply increasing and demand remaining constant, the equilibrium price of the final good tends to decrease, not increase.
4. Recognize that the improvement in technology does not reduce the availability of natural resources or the efficiency of labor and capital; rather, it enhances the efficiency of these factors.
5. Conclude that the most accurate description of an improvement in production technology is that it increases the productivity of factors of production.