When Technology Increases the Supply of a Good and Lower

question 31

Multiple Choice

When technology increases the supply of a good and lower prices increase the quantity demanded,

• A) the economy is reallocating resources to achieve an efficient allocation.
• B) consumer surplus falls.
• C) the invisible hand is unnecessary.
• D) the marginal benefit of the good increases with the quantity produced.
• E) the economy is no longer efficient because the quantity changes.

Explain how specialization and trade enable countries to consume beyond their production possibilities.

Analyze the impact of changes in exchange rates on trade balances.

Understand the concept of terms of trade and how they are determined.

Illustrate the benefits of free trade and the role of exchange rates in facilitating it.

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