technological change

• What are two reasons for the rapid pace of technological change in recent times?

  Improved knowledge and capabilities
• Invention is the commercial application of a new idea.

  False
• Technological change has been incentivized by greater access to patents, copyrights, and licenses
• Innovation can improve the production process of a business, which is considered small-scale
• What is the key difference between invention and innovation?

  Commercial application
• Creative destruction occurs when new innovations replace existing markets or businesses.
• What is creative destruction in the context of innovation?

  Replacing existing markets
• The mobile phone industry is an example of creative destruction, where previous technologies have become redundant
• The rise of Uber has destroyed traditional taxi services.
• What is one example of a traditional business model destroyed by Airbnb?

  Hotel chains
• Technological change always leads to more capital-intensive production.

  False
• The shift from walkmans to online music streaming illustrates the destructive impact of technology
• Economists agree that technological change has consistently created more jobs than it has destroyed.

  False
• Medical services often require labor to operate new technological advancements, resulting in more labor-intensive production.
• In which industry has the use of robots led to more capital-intensive production?

  Car production
• What do economists caution about the future impact of technology on job creation?

  Capital may replace labor
• Technological change reduces the cost of production for businesses.
• How does technological change affect the long-run average cost curve?

  It shifts downward
• Better technology can lead to specialized capital, resulting in technical economies of scale
• Specialization and division of labor are examples of technical economies of scale.
• Technological change promotes productive efficiency by reducing the cost of production
• What happens to the minimum efficient scale (MES) of production with technological change?

  It increases
• Allocative efficiency occurs when lower costs from technology are passed on to consumers through lower prices.
• The internet has reduced barriers to entry
• What is one example of dynamic efficiency resulting from technological change?

  New products
• Sunk costs are a major barrier to entry that has been reduced by the internet.
• What is one legal barrier to entry that has become easier to meet due to the internet?

  Employment law
• Brand loyalty is no longer a significant barrier to entry due to social media advertising.
• In which industry have economies of scale increased barriers to entry despite technological change?

  Pharmaceuticals
• The number of firms in a market depends heavily on the level of barriers to entry
• Product homogenity decreases with technological change.
• How has the internet improved knowledge for consumers about market conditions?

  Access to price information
• Technological change has made all markets equally competitive.

  False
• Imperfect knowledge in a market can arise due to patents, licenses, or copyrights
• Which industries have become hyper-competitive due to technological change?

  Hotels and taxis