Technological change Flashcards
define invention
the process of creating a new product or a new way to make a product.
define innovation
the act of improving or contributing to existing products.
describe how technology can increase productivity
using alternative machines to produce = is much faster than letting human do it = this means more of a G/S can be made, increasing productivity
state the 5 main effects of technology
- increased productivity
- decreased costs
- increasing contestability
- affect methods of production
- create new products and services
describe how technology can decrease costs
if productivity increases and things can be produced more quickly, the cost of producing decreases
describe how technology affects methods of production
as technology improves, firms may swap form old methods of production to new methods of production (may be more efficient)
describe how technology helps create new products and services
new technology = new products and services e.g. new technology like touch screens led to the creation of new products like smart phones
describe how technology can increased contestability
as costs go down, it becomes cheaper for new firms to enter new markets and contest big firms
what can new technology lead to
creative destruction
define creative destruction
when a new company destroys and replaces old technology
why is creative destruction good
old technologies get replaced with new technologies which are much moreefficientandincrease productivity.
state a problem with creative destruction
can create problems such asjob lossesfor those working in jobs relying on the old technology which has beendestroyed.
