Doing More with Less

While a decline in technology is theoretically possible, advances are more prevalent and a great deal more likely. A decline in technology means that a given amount of resources can be used to produce fewer goods, or that the same amount of production can be obtained with more resources.

Consider the production and supply of Wacky Willy Stuffed Amigos to illustrate an advance in technology. When William J. Wackowski founded of The Wacky Willy Company, he did so with limited technology. His sewing machines were manually operated. Workers cut patterns with simple scissors. The button eyes were attached to each stuffed creature with a needle and thread. The Stuffed Amigos were stuffed by hand. Using this limited technology, each Wacky Willy worker was able to fabricate five Stuffed Amigos per day.

The Wacky Willy Company now uses more advanced production technology. The entire process is automated and computerized, from pattern cutting to sewing to stuffing. This advanced technology allows each Wacky Willy worker to produce five hundred Stuffed Amigos per day.

An increase in production technology has made it possible for each Wacky Willy worker to produce more output. As a general rule, technological advances make it possible to produce more output with fewer inputs and with a reduction in production cost.

Shifting the Supply Curve

Production Technology

Now, consider how changes in production technology shift the supply curve.

• An Advance in Technology: An advance in production technology causes an increase in supply and a rightward shift of the supply curve. With the greater technology, sellers are able to sell more Stuffed Amigos. Click the [Advance] button to demonstrate.


• A Decline in Technology: A decline in production technology causes a decrease in supply and a leftward shift of the supply curve. With the less technology, sellers are able to sell fewer Stuffed Amigos. Click the [Decline] button to demonstrate.