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while the price limit is still in effect, automated publishing increases the efficiency of textbook production. show graphically the likely effect of this innovation on the market price and quantity?

User EzPizza
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Final answer:

Technological advancements in textbook publishing would cause the supply curve to shift right, increasing the equilibrium quantity of textbooks sold but not affecting the market price due to the price limit.

Step-by-step explanation:

The question involves the effects of technological innovation in the textbook publishing market while a price limit is enforced. If automated publishing increases the efficiency of textbook production, we expect the textbook supply curve to shift to the right, indicating an increase in supply due to technological advancement. To illustrate, let us assume no change happens in demand—this scenario is depicted in Figure (c) from the reference provided. Increased supply, with demand remaining constant, results in a larger quantity of textbooks sold at the same price level if the price ceiling is not binding. If the price ceiling was previously a binding constraint (with market price below equilibrium), the price remains the same due to the price limit, but the quantity sold increases up to the point where it reaches the price ceiling. The improved efficiency in production would not affect the market price due to the price limit but would increase the equilibrium quantity.

User Judge Maygarden
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