Question

A farmer traditionally irrigates fields manually (labour-intensive). He installs drip irrigation (a technology upgrade) that reduces water use by 40 per cent and increases yield by 30 per cent. How does this affect?

1. His cost of production
2. His willingness to supply at different prices
3. The overall market supply if many farmers adopt this technology

Answer 1

1. His cost of production is likely to decrease due to efficient use of water and resources.
2. He will be willing to supply more at different lower prices because production becomes more efficient.
3. The overall market supply will increase as more farmers produce larger quantities.