How does an improvement in technology affect production?

An improvement in technology significantly affects production by enhancing efficiency, which typically lowers production costs and increases the overall supply of goods and services. When a company adopts new technologies, it can produce more output with the same quantity of inputs or maintain the same output while using fewer inputs. This increased efficiency leads to lower average costs per unit, allowing firms to either reduce prices or increase their profit margins while maintaining prices.

As production costs decrease due to the use of advanced technology, firms are incentivized to produce more, shifting the supply curve to the right. This greater supply can stimulate economic growth by making products more accessible and often leads to increased consumer demand. Consequently, the result is not only a higher quantity of goods available in the market but also potential economic benefits like job creation in growing industries.

In summary, technological improvements typically lead to a reduction in production costs while simultaneously boosting supply, making option B the most accurate reflection of these dynamics in macroeconomic terms.