Final answer:
A technological advance that reduces variable resources needed to produce output leads to an increase in supply curves and higher profits for existing firms. This attracts more firms to enter the market and increases the overall supply until profits are driven back to zero.
Step-by-step explanation:
When a technological advance reduces the amount of variable resources needed to produce any level of output, the result is an increase in supply curves by individual firms and at the market level. This means that the existing firms will experience higher profits, attracting other firms into the market.
As new firms enter the market and supply increases, profits will eventually be driven back to zero. This adjustment process occurs as a result of the technological improvement reducing costs of production.