Question

Suppose that a technological advancement substantially reduces the cost of producing cheese. We would predict that the equilibrium quantity of cheese will ________ and the equilibrium price of cheese will ________.

Answer 1

Rise; Fall

Step-by-step explanation:

The equilibrium price is the market price where the quantity of goods supplied is equal to the quantity of goods demanded while Equilibrium quantity is the quantity that exists when a market is in equilibrium. ... In a market graph, the equilibrium quantity is found at the intersection of the demand curve and the supply curve. With the reduced cost of production due to technological advancement, it is expected that there will be a rise in the equilibrium quantity with a corresponding fall in the Equilibrium price.