Final answer:
A firm will supply a higher quantity of its output at any given price and the supply curve will shift to the right when the cost of production falls. This is due to improvements in technology or other factors that reduce production costs, leading to increased supply efficiency and profitability.
Step-by-step explanation:
When cost of production falls, a firm will supply a higher quantity at any given price for its output, and the supply curve will shift to the right. This scenario occurs when there are changes such as an improvement in technology that reduces production costs, or any other factor that makes it cheaper for the firm to produce goods. A rightward shift in the supply curve signifies that the firm is able to supply more of the output at every price point, reflecting an increase in supply.
An improvement in technology often leads to reduced production costs, which allows firms to lower prices or supply a greater quantity at the existing price levels. Such improvements in the production process are a key reason for a supply curve to shift to the right. Therefore, when the cost of production falls, it is indicative of increased efficiency, which enhances a firm's profitability and bolsters their inclination to produce more.