Question

Select the correct answer from each drop-down menu.

Different factors have an effect on supply and demand. Below, determine how each factor affects supply and demand.
Technical improvements cause production costs to decline, which causes
to increase and prices to
Decreased unemployment causes consumer incomes to
v. which causes
to increase.

Answer 1

Technical improvements decrease production costs, causing supply to increase and prices to potentially decrease. Decreased unemployment raises consumer incomes, which tends to increase demand and potentially leads to higher prices.

Step-by-step explanation:

Different factors have an effect on supply and demand. Technical improvements can lead to a decrease in production costs. When production costs decline, firms are able to produce more goods or offer more services for the same cost, or offer their goods and services at a lower cost, thereby increasing supply. A higher supply with unchanged demand typically leads to decreased prices of goods and services.

On the other hand, decreased unemployment generally results in more people having income to spend, which can increase their ability to purchase goods and services. This rise in consumer income tends to increase demand. An increase in demand, given a stable supply, often results in higher prices, as more consumers compete to purchase the available goods and services.