Microeconomics,, 16th Canadian Edition

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to the left; a fall in the price of inputs makes production more profitable
and therefore shifts the supply curve to the right.



  1. Technology


At any given time, what is produced and how it is produced depend on
the state of technology and knowledge. Over time, however, technology
changes. The enormous increase in production per worker that has been
going on in industrial societies for over 200 years is due largely to
improved methods of production. The Industrial Revolution is more than
a historical event; it is a present reality. Today, advances in technology
are causing revolutionary increases in our ability to produce new
products and services. Nanotechnology, 3D printing, cloud computing,
robotics, and artificial intelligence are all examples of technologies that
are both reducing the costs of producing existing goods and also
increasing the range of products we are able to produce. These changes in
the state of knowledge cause shifts in supply curves.


Any technological innovation that decreases the amount of inputs needed
per unit of output reduces production costs and hence increases the
profits that can be earned at any given price of the product. Because
increased profitability leads to increased willingness to produce, this
technological change shifts the supply curve to the right.



  1. Government Taxes or Subsidies


We have seen that anything increasing firms’ costs will shift the supply
curve to the left, and anything decreasing firms’ costs will shift the supply

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