What happens to the supply curve of a manufactured product when technological innovation lowers production costs across an entire industry?
Answer and explanation
Correct answer: B. The supply curve shifts to the right (downwards)
- Step 1: Lower marginal production costs mean firms are willing to supply more output at every given market price. Step 2. This shifts the entire market supply curve to the right, driving down price and increasing market volume. Answer: The supply curve shifts to the right (downwards). Why not the others: Leftward supply shifts occur when input costs rise; movement along the curve is caused only by changes in the good's own price.
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