Technological progress increases the efficiency of mass producing HDTV-capable television sets. At the same time, more cable and television networks begin broadcasting in HDTV format, increasing the appeal of HDTV-capable television sets. On the basis of this information, what can be said about conditions in the HDTV market?
A)The equilibrium quantity and price of HDTV-capable sets will increase.
B)The equilibrium quantity of HDTV-capable sets will increase and price will decrease.
C)The equilibrium quantity of HDTV-capable sets will increase and what happens to price is indeterminate.
D)The equilibrium quantity of HDTV-capable sets will decrease and price will increase.

Question

Technological progress increases the efficiency of mass producing HDTV-capable television sets. At the same time, more cable and television networks begin broadcasting in HDTV format, increasing the appeal of HDTV-capable television sets. On the basis of this information, what can be said about conditions in the HDTV market?
A)​The equilibrium quantity and price of HDTV-capable sets will increase.
B)​The equilibrium quantity of HDTV-capable sets will increase and price will decrease.
C)​The equilibrium quantity of HDTV-capable sets will increase and what happens to price is indeterminate.
D)​The equilibrium quantity of HDTV-capable sets will decrease and price will increase.

Quizplus · Accepted Answer

Technological progress in manufacturing increases supply (making it cheaper to produce HDTV sets), and more content available in HDTV format increases demand. Both these factors lead to an increase in the equilibrium quantity. However, the effect on price is indeterminate without knowing the relative magnitudes of the shifts in supply and demand.

Technological Progress Increases the Efficiency of Mass Producing HDTV-Capable Television