Suppose that McDonald's successfully implements self-serve kiosks in their restaurants,and this investment in technology allows the company to reduce the number of employees at each location.All else equal,this technological improvement would ________ the equilibrium price for its products and ________ the equilibrium quantity consumed.
A)increase; increase
B)increase; decrease
C)decrease; increase
D)decrease; decrease

Question

Quizplus · Accepted Answer

The implementation of self-serve kiosks would reduce the cost of production for McDonald's, leading to a shift in supply to the right. This would result in a lower equilibrium price and a higher equilibrium quantity consumed. The reduction in number of employees would decrease production costs, but would also lead to a decrease in the demand for the products. However, the decrease in cost would have a stronger effect on the market, resulting in an increase in the quantity consumed despite the decrease in demand. Therefore, the correct answer is C, decrease in equilibrium price and increase in equilibrium quantity consumed.

Suppose That McDonald's Successfully Implements Self-Serve Kiosks in Their Restaurants,and