Question

Mention the impact of advanced technology on the supply of a commodity.

Explain the effect of improved (or advanced) technology on the supply curve of a commodity.

With the help of a diagram, explain the effect of technical advancement on the supply curve.

Answer 1

Improvement in the technique of production reduces the cost of production. Consequently, profits tend to increase, inducing an increase in supply and the supply curve shifts to the right.

1. Increase in Supply: Advanced technology makes production more efficient, enabling producers to supply more at the same price.
2. Reduction in Cost of Production: Improved methods lower input costs, which increases profitability and encourages greater supply.
3. Rightward Shift of Supply Curve: Due to cost savings and efficiency, the supply curve shifts outward (rightward), showing an increase in supply at each price level.

Technological advancement → Cost ↓ → Profit ↑ → Supply ↑ → Rightward shift