Select the correct answer from each drop-down menu.
Different factors have an effect on supply and demand. Below, determine how each factor affects supply and demand.
Technical improvements cause production costs to decline, which causes
to increase and prices to
Decreased unemployment causes consumer incomes to
v. which causes
to increase.

1. Technical improvements cause production costs to decline, which causes supply to increase and prices to decrease.

2. Decreased unemployment causes consumer incomes to increase which causes demand to increase and hence price to increase.

Explanation:

Demand refers to a consumer's desire to purchase a particular good or service at a given time for a specific price. Supply on the other hand, is the willingness of a producer to produce a particular good or service at a given time for specific price.

1. Production cost is a factor that influences supply. For example, cost of labor or raw material cost. When production costs fall, more products can be produced at a lesser cost. Hence'

2. When unemployment decreases, it means that more people are working in the economy and hence their incomes are also higher. This means there is a higher purchasing power and also higher demand for products. Hence,