Question

Explain how technological progress is a determinant of supply of a good by a firm?

Answer 1

The level of technology is one of the factors that directly affects the supply of a good. That is, while other things remain the same, there exists a $positiverelationshipbetweenthestateoftechnologyandthequantityproduces$. With the appreciation in the level of production techniques, per unit production goes down. This encourages the producers to produce higher quantities of goods, thereby increasing the supply of the goods.

On the contrary, a depreciation in the production technology raises the per unit cost of production, thereby decreasing the supply of good.