QUESTION8 Chapter 04 MC Sections 1-3-145: A technological advance that reduces p

Question

QUESTION8 Chapter 04 MC Sections 1-3-145: A technological advance that reduces production costs will shift the o a. supply curve to the right b. supply curve to the left. O c. demand curve to the right. d. demand curve to the left. QUESTION9 Suppose the quantity of ice cream demanded by Catherine (Q depends upon ( the weather. () Catherine's income, (ii) the price of ice cream, (iv) the price of frozen yogurt (which Catherine tends to buy more of when ice cream becomes more expensive), (v) the price of bananas (which Catherine tends to consume with ice cream), and (vi) Catherine's optimism about her future. The Law of Demand is the assumption that: 0 a. Qd will decrease if the price of ice crearm increases O b.od Qd will increase if the price of ice cream decreases, assuming all the other factors that affect Catherine's consumption decisions remairn unchanged. Q increase in Catherine's income increases. Qd will increase if Catherine becomes more optimistic about her future. eAll of the above are assumed by the Law of Demand.

Explanation / Answer

(Question 8) Option (a)

The cost-reducing innovation will decrease production cost, so firms will increase output. Supply will increase, shifting supply curve rightward.

(Question 9) Option (c)

As per law of demand, a decrease (increase) in price leads to an increase (decrease) in quantity demanded, assuming other determinants of demand remain unchanged (ceteris paribus assumption).

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