Advancements in technology can expand the economy’s production possibilities. Technology determines the maximum amount of output an economy can produce given the resources it has. New and better technology makes it possible for us to get more output from our resources. An important form of technological change is intention the use of science and engineering to create new products or processes. In recent years, for example, inventions have allowed us to develop photographs faster and more cheaply, process data more rapidly, get more oil from existing fields, and send information instantly and cheaply by satellite. Such technological advances increase our production possibilities, shifting our economy’s entire production possibilities curve outward.
An economy can also benefit from technological change through innovation -the practical and effective adoption of new techniques. Such innovation is commonly carried out by an entrepreneur-a person who introduces new products or improved techniques to satisfy consumers at a lower cost. To make a profit, an entrepreneur must convert or rearrange resources in a way that increases their value. This also pushes the production possibilities curve outward.
Take, for example, Henry Ford, an entrepreneur who changed how cars were made by pioneering the assembly line. With the same amount of labor and materials, Ford made more cars, more cheaply. Another entrepreneur, the late Ray Kroc, purchased a hamburger restaurant from Richard McDonald and built it into the world’s largest fast-food chain. Kroc revolutionized fast food by offering attractive food at economical prices. He also developed a franchising system that resulted in uniform quality across the many different McDonald’s restaurants worldwide. More recently, entrepreneurs like Steven Jobs (Apple Computer) and Bill Gates (Microsoft) helped develop the personal computer and software programs that dramatically increased their usefulness to businesses and households. It is interesting to think about how a few famous entrepreneurs have improved our productivity and changed our lives so much.