An article on forbes.com discussed a business decision by Matt O’Hayer, owner of Vital Farms. O’Hayer was one of the first poultry farmers to begin selling pastured eggs. He committed to raising his chickens with each having 108 feet of outdoor space. According to the article, “It was one of many decisions he made knowing it would likely limit his company’s growth.”
a. In what sense did O’Hayer’s decision to take on these additional costs of raising chickens limit his company’s growth? Wouldn’t his farm have been more profitable if he had kept his costs down by raising chickens the traditional way, confining them indoors in small cages?
b. Briefly explain what is likely to happen to the profitability of O’Hayer’s farm in the long run.