Question

New X-ray technology has been discovered in Australia which can detect any form of gold. This technology is efficient in terms of speed and accuracy. a. What effect do you think the new X-ray technology will have on the price of gold in Australia? b. Who will benefit from this new technology? Explain your answer.

Short answer

Gold prices may decrease due to increased supply. Miners, consumers, and the Australian economy will benefit from the new technology.

Step-by-step solution

Understanding the Effect on Gold Prices

When a new technology increases the efficiency of gold detection, it is likely that the supply of gold will increase. An increase in supply, assuming demand remains constant, generally leads to a decrease in prices.

Who Benefits from the New Technology?

Various stakeholders could benefit from the new technology. Miners and mining companies could extract gold more efficiently, reducing their costs and potentially increasing their profits. Consumers might benefit from lower gold prices. Additionally, the Australian economy might benefit from increased gold exports.

Key concepts

Gold Supply

The discovery of new X-ray technology in Australia is a significant advancement for the mining industry. This technology allows for the precise and efficient detection of gold.
When technology improves detection, it usually means that gold mining becomes easier and more effective. This means more gold can be found and mined quicker than before.

As a result, the overall supply of gold in the market increases.
When there’s more of a product available, supply increases. If the demand for gold stays the same, this usually leads to a decrease in the price of gold. This is basic supply and demand economics.

Price Fluctuation

Price fluctuation refers to the changes in the price of a product over time due to various factors.
With the introduction of advanced X-ray technology, the supply of gold increases. More gold available means lower prices if demand remains the same.

However, it's essential to note that other factors can also affect gold prices. These include global economic conditions, changes in currency values, and investor demand. While the increased supply will likely lead to lower prices in Australia, global factors can sometimes counterbalance or even override this effect.

So, while we can anticipate a price drop due to higher supply, the final price of gold can still fluctuate due to these other influences.

Beneficiaries of Technological Advancements

New technologies often bring widespread benefits to different groups. The new X-ray technology in gold mining is no different.

• Miners and mining companies stand to benefit significantly. They can find and extract gold more efficiently, reducing costs and increasing their profits.
• Consumers may also gain from lower gold prices. This could make gold jewelry and other gold products more affordable.
• The Australian economy could benefit from increased gold exports, bringing in more revenue and potentially leading to economic growth.

So, while the primary beneficiaries are miners and consumers, the broader economy can also see positive effects from such technological advancements.