Question

Suppose society faces a broad tradeoff between allocating resources to the production of investment goods (computers) and consumption goods (cars) before the improvement in technology described above.Which of the following events would be most likely to lead to the improvement in technology you just illustrated?A) Increasing production of investment and consumption goodsB) Decreasing production of investment and consumption goodsC) Increasing production of investment goods and decreasing production of consumption goodsD) Decreasing production of investment goods and increasing production of consumption goods

Answer 1

The event likely to lead to technological improvement is increasing production of investment goods and decreasing production of consumption goods, as the investment in technology can drive innovation, lower production costs, and increase supply.

Step-by-step explanation:

The question asked is which event would most likely lead to an improvement in technology for the production of goods, where society faces a tradeoff between allocating resources to investment goods (computers) and consumption goods (cars). The answer is C) Increasing production of investment goods and decreasing production of consumption goods. This is because investment in technology is often crucial for improving production processes and efficiency, leading to advancements. When resources are allocated towards investment goods like computers, it may result in technological innovation, which can reduce production costs and lead to a rightward or downward shift in the supply curve, indicating an increase in supply.

Improving technology can also lead to better product quality, increasing consumer demand and preferences, hence shifting the demand curve to the right. This is an essential aspect of understanding how resource allocation impacts technological advancements and, consequently, market supply and demand.

Answer 2

C. Increasing production of investment goods and decreasing production of consumption goods

Step-by-step explanation:

When technology improves, it increases the overall production capacity of the economy. Therefore, the economy can produce more of all the goods.