Suppose Technological Improvements Reduced the Cost of Producing Automobiles by 50

question 13

Multiple Choice

Suppose technological improvements reduced the cost of producing automobiles by 50 percent, causing the price of automobiles to decline by a similar amount. Which of the following would necessarily result from this development?

• A) Employment in the automobile industry would decrease.
• B) Real income would increase.
• C) Real income would decrease.
• D) Both a and c are correct.

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Definitions:

College Enrollment

The process by which students register and are admitted to a college or university to pursue higher education.

Textbooks

Educational materials consisting of written or printed pages bound together, used for teaching and study purposes.

Hamburger Buns

The bread used specifically for holding a hamburger patty along with its toppings.

Complements

Items frequently purchased in tandem, where a rise in the demand for one item results in a heightened demand for its companion product.