There Is a Technological Advance in the Production of a Good

question 122

Multiple Choice

There is a technological advance in the production of a good and simultaneously also an increase in the expected future price. Which of the following will happen?

• A) The equilibrium price will rise because the supply curve shifts rightward.
• B) The technological improvement shifts the supply curve rightward while the increase in the expected future price shifts the supply curve leftward. The net effect is not known.
• C) The equilibrium price falls because the supply curve shifts leftward.
• D) The demand curve shifts rightward and the supply curve does not shift.

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Definitions:

Pricing Strategy

The approach a company uses to determine the best price for its products or services to maximize profits and meet customer expectations.

Tacit Collusion

Coordination between competing firms that occurs without direct communication, often through price signaling or market strategies, avoiding explicit agreements.

Cartel

An association of independent businesses or countries that agree to coordinate production, pricing, and marketing of a product to monopolize a market or maximize profits.

Dominant-Strategy Equilibrium

A situation in game theory where one strategy is better than others, regardless of what any other player chooses.