Question

If the level of technology used in the production of a good improves, and assuming the quality of the good does not change, then what are the possible outcomes?

1) more output may be obtained with a given amount of inputs compared to before the technological improvement
2) a given amount of output may be obtained with fewer inputs compared to before the technological improvement
3) the firm will increase its use of other inputs, such as the number of workers it employs
4) market demand for the good will increase

Answer 1

A technological improvement in production can lead to more output with the same inputs, less inputs to obtain the same output, and changes in the use of other inputs.

Step-by-step explanation:

When the level of technology used in the production of a good improves, several possible outcomes can occur:

1. More output may be obtained with a given amount of inputs compared to before the technological improvement. This means that the production process becomes more efficient, allowing the firm to produce more goods using the same amount of resources.
2. A given amount of output may be obtained with fewer inputs compared to before the technological improvement. This means that the firm can produce the same amount of goods while using fewer resources, leading to cost savings.
3. The firm may increase its use of other inputs, such as the number of workers it employs. Although the quality of the goods remains the same, the firm may choose to hire more workers to meet the increased demand or to take advantage of the improved technology.

Therefore, the possible outcomes of a technological improvement in production are increased output efficiency, cost savings, and potential changes in the use of other inputs.