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Over time, firms in a competitive industry can often make adjustments to some technology -- like...

Over time, firms in a competitive industry can often make adjustments to some technology -- like rideshare customer and navigation apps -- that lower marginal costs and increase the supply. What is the impact of such supply increases on equilibrium price? Explain.

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Answer : In a competitive industry if firms' marginal cost decrease then they produce more than before. This higher production increase the market supply. As a result, the market supply curve shift to rightward. For this reason at new equilibrium the price level decrease. Therefore, due to increase in supply the equilibrium price fall.

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