MANAGERIAL ECONOMICS
WITH THE AID OF APPROPRIATE DIAGRAMS, ILLUSTRATE THE EFFECTS OF SIMULTANEOUS CHANGES IN INCOME AND TECHNOLOGY ON DEMAND AND SUPPLY
1. With the increase in income people would have more money to spend which increases the demand thus shifts the demand curve to right and hence the price increases
2. Now with the advancement of
technology, the supply increases which shifts the supply curve to
right thus reducing the price
So with the increase in income and technology the price comes back
to earlier level and with higher quantity which increases
consumption. In the above graph the quantity increases from Q to Q2
levels with price level remaining at earlier P level.
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