The farmer cost of production decreases substantially due to reduced resource usage and higher efficiency. Consequently, his willingness to supply at various prices increases and widespread adoption increases the overall market supply.
A farmer traditionally irrigates fields manually (labour-intensive). He installs drip irrigation (a technology upgrade) that reduces water use by 40% and increases yield by 30%. How does this affect a) His cost of production b) His willingness to supply at different prices c) The overall market supply if many farmers adopt this technology
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His cost of production decreases because efficient drip irrigation reduces labor and water expenses while boosting agricultural yield. Lower costs improve profit margins, increasing his willingness to supply larger quantities across different price levels. If multiple farmers adopt this technology, aggregate production grows significantly, shifting the overall market supply curve outward and expanding availability across the entire marketplace.
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