How does the use of new technology in industry typically benefit consumers more than producers?

• A. By reducing the quantity supplied in the market
• B. By lowering production costs, which leads to lower market prices and increased consumer surplus
• C. By causing producers to receive less revenue from each unit sold
• D. By increasing the willingness to pay of producers for inputs

Answer: (B)

Verified step by step guidance

1. Understand the role of new technology in production: New technology typically improves production efficiency, which means producers can produce the same quantity at a lower cost or produce more at the same cost.
2. Analyze the effect on production costs: When production costs decrease due to technology, the supply curve shifts to the right, indicating an increase in quantity supplied at every price level.
3. Examine the impact on market prices: With increased supply and lower production costs, the market price tends to fall, benefiting consumers by making goods more affordable.
4. Consider consumer surplus: Lower prices increase consumer surplus, which is the difference between what consumers are willing to pay and what they actually pay, thus benefiting consumers more.
5. Evaluate producer revenue and surplus: Although producers may receive less revenue per unit due to lower prices, the reduction in costs can maintain or increase their overall profit, but the primary direct benefit to consumers is through lower prices and increased consumer surplus.