New technology improves produc

First of all, let’s understand what an equilibrium price is. Inlayman’s terms, the price at which market is in equilibrium alsoimplies the quantity supplied is equal to quantity demanded.

According to the question, as the technology improves productionof satellites that means the supply is increasing and at the sametime the price of cable tv decreases, indicating an increase in thedemand of the satellites. We will have to consider a case whenchanges in both the supply and demand take place.

When the demand and supply are in changing in the samedirection, i.e. increasing here, the change in theequilibrium output can be determined but the effects on theequilibrium price cannot be determined. Understand it thisway, if the demand and supply both are increasing, the consumersare willing to buy more and the sellers and willing to supply more,resulting in an increase in the quantitiesof the product. However, since the consumer is putting ahigh value on each input and the supplier is willing to put a smallprice on each unit, the effect on the equilibrium pricewill be determined by the relative size of the twochanges.

The graphs are shown in the figure attached to the answer.