Read the passage carefully and answer the question based on the passage:

Demand and Technology

Consider the case of a local coffee shop that faces rising demand for its products. In response to the increase in demand, the shop owner decided to increase the price of a cup of coffee. As a result, suppliers in the market respond by increasing their supply, hoping to capitalize on the higher price. If the coffee shop invests in a new espresso machine that makes coffee more efficiently, the cost of producing each cup decreases. This leads to an increase in supply and sell more coffee at the same or lower price, benefiting both the producers and consumers. This cost-reduction technology is helpful in the context of the real world.

What is the main purpose of Cost Reduction Technologies in business?

To maintain price level and to increase profit margins.

The correct answer is Option (2) → To maintain price level and to increase profit margins.

Cost reduction technologies are introduced in business to produce goods more efficiently and at a lower cost. When the cost of production decreases, firms can supply the same quantity at a lower cost or even reduce prices slightly to remain competitive, while still maintaining or increasing their profit margins. This allows businesses to operate more efficiently, respond better to competition, and improve profitability without necessarily raising prices.