In the context of introduction to economics, how does the use of new technology in industry primarily benefit producers more than consumers?

• A. It guarantees lower prices for consumers.
• B. It eliminates competition among producers.
• C. It reduces production costs, allowing producers to increase profits.
• D. It increases consumer demand for outdated products.

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the role of technology in production. New technology typically improves the efficiency of the production process, which means producers can make goods using fewer resources or in less time.
2. Step 2: Recognize that reducing production costs means producers spend less money to create the same quantity of goods. This cost saving directly increases the potential profit margin for producers if prices remain constant.
3. Step 3: Analyze the impact on prices. While lower production costs can lead to lower prices for consumers, this is not guaranteed. Producers may choose to keep prices stable to maximize profits rather than passing all savings to consumers.
4. Step 4: Consider competition. New technology does not eliminate competition; instead, it can intensify competition as producers strive to adopt innovations to reduce costs and gain market advantage.
5. Step 5: Conclude that the primary benefit of new technology is to reduce production costs, which allows producers to increase profits, rather than guaranteeing lower prices or affecting consumer demand for outdated products.