The invention of a self-milking cow machine allows cows to milk themselves. Not only does this reduce the need for higher cost human assistance in...

This particular example is a bit weird, but the basic idea is that technological advancement has reduced the cost of supplying some good.This will shift the supply curve to the right—we can produce a higher quantity for the same price.

Assuming that demand and supply are both moderately elastic (neither is perfectly elastic nor perfectly inelastic), this will increase the quantity of milk sold and decrease the price at which it is sold. I've...

This particular example is a bit weird, but the basic idea is that technological advancement has reduced the cost of supplying some good.

This will shift the supply curve to the right—we can produce a higher quantity for the same price.

Assuming that demand and supply are both moderately elastic (neither is perfectly elastic nor perfectly inelastic), this will increase the quantity of milk sold and decrease the price at which it is sold. I've shown that in figure 1.

Now we consider what happens to a substitute good, apple juice. The supply of apple juice is unaffected by this technology, but since milk is a substitute and the price of milk has decreased, this means the demand for apple juice will decrease, shifting the demand curve to the left—people will buy a smaller quantity for the same price. Again, if both supply and demand are moderately elastic, the price will go down, but the quantity sold will still go down in this example. This I've shown in figure 2.