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Definition of Technology: 

Technology is the application of scientific knowledge to produce a good or service in the most efficient manner.

Detailed Explanation:

The quest to minimize the cost of production spurs businesses to seek improvements in technology. Advances in computer technology continue to improve the efficiency of businesses. Access to the internet has saved companies time and money. For example, legal firms can save thousands of dollars annually by scanning and sending legal documents over the internet rather than using an express mail service or traditional mail. Software advances reduce the time needed to complete complex chores. Contractors can now receive plans over the internet and use software to provide bids sooner and more accurately. E-books have substantially reduced publishing costs. Robots have replaced human labor in the manufacturing process of everything from jelly beans to automobiles. Cassette players are virtually obsolete because CDs are so much clearer, more durable, and hold more music than cassette tapes. CDs are even becoming less common today as more and more people are switching to digital media devices like iPods or MP3 players. Some consumers do not purchase any music at all; instead, they simply streamline their music on their computers using free software like Pandora, Spotify, or Grooveshark. Fracking is a new technology that was developed to assist oil companies in extracting more oil from shale. This technology has dramatically increased the supply of oil and natural gas, which has helped lower the price of gasoline.

Improvements in technology shift a producer’s supply curve to the right because it reduces its cost. Producers are willing to produce more of their good or service at all prices. In our lesson, we used the example of introducing robotics to manufacture jelly beans. Please note that the figures are for illustration purposes only.

Companies must keep pace with technology. Some companies have met their demise by betting against a change in technology. Blockbuster all but ignored using the internet to streamline movies or order movies online and lost out to Netflix.

Dig Deeper With These Free Lessons:

Changes in Supply – When Producer Costs Change
Supply – The Producer’s Perspective
Supply and Demand – Producers and Consumers Reach Agreement
Price Elasticity of Supply – How Does a Producer Respond to a Price Change
Capital and Consumer Goods – How They Influence Productivity
Factors of Production – The Required Inputs of Every Business

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