Supply and Demand for Widgets 

1. Produce a supply and demand graph based on the standard assumptions of perfect competition. Clearly label each curve and axis. 

2. Imagine that there are technological improvements in the production of widgets. Demonstrate what would happen to supply and/or demand by drawing the new supply and/or demand curve. Add arrow(s) from the original to the new supply and/or demand curve(s). 

3. What happens to equilibrium price? Does it increase, decrease or stay the same? What happens to equilibrium quantity? Does it increase, decrease, or stay the same?