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CSEET · Economic and Business Environment · Basics of Demand and Supply and Forms of Market Competition

A new technology reduces the cost of producing cement in India, with the price of cement unchanged. What is the effect on the supply curve of cement?

The supply curve shifts to the right. Better technology lowers production costs, so firms supply more cement at each price. This is a change in supply, not a movement along the curve, because the cement price itself has not changed.

  1. AMovement along the curve to a lower point
  2. BMovement along the curve to a higher point
  3. CRightward shift of the supply curveCorrect
  4. DLeftward shift of the supply curve

Explanation

Improved technology lowers the cost of production, so producers can supply more at every price. This is an increase in supply, shown by a rightward shift. A movement along the curve occurs only when the commodity's own price changes, which is not the case here.

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