The following Table shows a farm\'s production possibilities. __________________
ID: 1223718 • Letter: T
Question
The following Table shows a farm's production possibilities.
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Soybean Chicken
(bushels) (pounds)
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600 and 0
400 and 300
200 and 500
0 and 600
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If the farm adopted new technology, which allows it to use fewer resources by a fixed percentage to grow chickens (quality of chicken is unaffected by this new technology), explain how production possibilities will change. Will opportunity costs of a bushel of soybeans be affected in any way?
Explanation / Answer
The production possibilities is the boundary between the combinations of goods and services that can be produced , given the available factors of production and the state of technology. If the farm adopted new technology, the cost of producing the chicken will decrease, it means fewer resources can produce more chicken, so that the chicken production will increase. In other wards, same resources can produce more chicken than the bushel of soybean, the farmer might tend to use more resources to produce chicken instead of producing the bushel of soybean.
The opportunity cost of producing a bushel of soybean will increase.