23. Figure: Demand, Supply Shifts Reference: Ret 4-13 (Figure: Demand, Supply Sh

Question

23. Figure: Demand, Supply Shifts Reference: Ret 4-13 (Figure: Demand, Supply Shifts) In the figure, the initial demand curve is D and the initial supply curve is S1. If technological innovations lower the costs of production, what will happen? O Di will shift to Ds and equilibrium price and equibrium quantity will increase. O S1 will shift to S2 and equilibrium price will increase but equilibrium quantity will decrease. O S, will shift to S3 and equilbrium price will decrease but equibrium quantity will increase. O Di will shift to D2 and equilibrium price and equilibrium quantity will decrease.

Explanation / Answer

Answer
Option 3
The decrease in the cost increases the supply and the supply curve S1 shifts to S3 and the equilibrium price decreases and quantity increases but the demand curve stay the same D1.

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