Question

How does technological progress affect the firms' supply curve?

• A. Shift to the right.
• B. Shift to the left.
• C. Remain at same place.
• D. Shift in vertical shape.

Hint:

Costs \downarrow or productivity \uparrow → supply right; costs \uparrow or disruptions → supply left.

Answer 1

The Correct Option is A

Step 1: Effect of technology on costs and productivity.
Technological progress raises productivity and/or lowers per-unit costs for a given level of inputs.
Lower costs at each output level → firms are willing to supply more at each market price.
Step 2: Translate to supply curve movement.
At every price, quantity supplied increases → the entire supply curve shifts rightward (outward).
A leftward shift would indicate higher costs or reduced capacity, which is opposite to technological progress.
Final Answer: \[ \boxed{\text{Technological progress shifts the supply curve to the right.}} \]