What effect might new technology have on production?
A farmer purchases a new type of seed corn that will reduce her need for pesticides by two-thirds. The new seed is only slightly more expensive than the type she has planted in the past.
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The new type of seeds are better for the farmer as the requirement for pesticides is reduced by two-thirds. And the cost of the seeds is not slightly more than what is being used by the farmer right now.
The new technology will benefit the farmer. The cost of pesticides can be substantial for a farmer. As the farmer only spends one third the amount that is being spent on pesticide right now, it is a large saving. The cost incurred in adopting the new technology is very small as the new type of seeds are more expensive than those being used right now by a very small amount.
(The assumption made here is that there is no loss in the yield when the seeds in use right now are replaced by those created using the new technology.)
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