Question

How does a cost saving technological progress affect market price and the quantity exchanged of a commodity? Use diagram.

Answer 1

A cost saving technological progress reduces unit cost of production of a commodity. This will cause an increase in the supply of a commodity and leads to a rightward shift of the supply curve as shown in the diagram given. The demand curve of the commodity remaining the same, this will cause the market price of the commodity to fall and the quantity to rise.
It is clear from the diagram that as a result of increase in supply, the supply curve shifts rightwards. As a result the price falls from OP to $O{P}_1$ and the quantity rises from OQ to $O{Q}_1$.