Question

An example of robotics is the use of automated machinery on an assembly line. Assume the machines in this scenario produce the same end product as the humans they replaced. The finished product is no better and no worse than that made by human hands. The machines in this scenario don't make a better product. However, the machines do make the product faster and more efficiently.

CHANGES TO DEMAND OR SUPPLY & THE EFFECT ON EQUILIBRIUM PRICE & QUANTITY: This scenario is separate from any and all previous scenarios.

HERE IS SCENARIO THREE: The following three questions relate to this scenario.

What happens when robotics and other high-tech manufacturing improvements make the production process faster and more efficient?

Which curve is affected by this scenario?

	A.	The SUPPLY curve for the finished product.
	B.	The DEMAND curve for the finished product.
	C.	NEITHER curve is affect by this scenario.

What is the effect of robotics on the EQUILIBRIUM PRICE of the finished product?

	A.	Equilibrium price will DECREASE as a result of this scenario.
	B.	Equilibrium price will INCREASE as a result of this scenario.
	C.	Equilibrium price will REMAIN THE SAME as a result of this scenario.

What is the effect of robotics on the EQUILIBRIUM QUANTITY of the finished product?

	A.	Equilibrium QUANTITY will DECREASE as a result of this scenario.
	B.	Equilibrium QUANTITY will INCREASE as a result of this scenario.
	C.	Equilibrium QUANTITY will REMAIN THE SAME as a result of this scenario.

Answer 1

Case when robotics and other high tech improvements make production process faster, producers would be able to produce more goods in minimum time possible which raises their efficiency for the good. It raises their supply of goods while demand remains the same.

a) It shifts the supply curve to its right from S to S1. Option A is correct.

b) It reduces the equilibrium price from P to P1 level. Option A is correct.

c) It raises the output from Y to Y1. Option B is correct.