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18 December, 12:08

Suppose there is a major technological advance in the production of a good that causes production costs to fall. If demand for the product is relatively inelastic, what will happen in the market?

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  1. 18 December, 16:03
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    Answer: If there is a major technological advance in the production of a good that causes production costs to fall and the demand for the product is relatively inelastic: As production costs fall, it will cause an increase in supply, therefore the price will fall, but demand as it is inelastic will not increase in the same amount as the price rises.
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