An economic historian argues that the widespread adoption of new, energy-intensive machinery in 18th-century British textile production was driven purely by the genius of inventors creating a technologically superior method. Based on an economic model where firms always choose the production technology with the lowest total cost, which statement best evaluates the historian's claim?
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A model shows two methods for producing a specific quantity of cloth:
- Technology A: Uses a small amount of labor and a large amount of energy.
- Technology B: Uses a large amount of labor and a small amount of energy.
In the 17th century, historical data shows that firms chose Technology B. In the 18th century, firms switched to Technology A. Assuming both technologies were available in both centuries and that firms always choose the lowest-cost production method, what is the most logical economic explanation for this shift?
Weaving Mill Technology Choice
Analyzing Shifts in Production Technology
A model illustrates two methods for producing cloth: Technology A (low labor, high energy) and Technology B (high labor, low energy). It also shows two economic environments based on the relative cost of labor and energy, represented by isocost lines HJ and FG. Match each item in the first column to its correct description in the second column.
A model of production shows two methods to produce 100 meters of cloth:
- Technology A: Requires 2 workers and 10 tonnes of coal.
- Technology B: Requires 10 workers and 1 tonne of coal.
In the 18th century, the price of labor was high relative to the price of coal, and historical records show that firms chose Technology A as the lowest-cost option.
Now, suppose a new method, Technology C, is invented. It can produce the same amount of cloth using 4 workers and 4 tonnes of coal. Based on the economic conditions of the 18th century (where Technology A was cheaper than Technology B), which of the following statements provides the most accurate assessment of Technology C?
Analyzing Technological Shifts Using Isocost Lines
Consider a model of production where firms can choose between a labor-intensive technology (high labor, low energy) and an energy-intensive technology (low labor, high energy). In one historical period, firms used the labor-intensive method because it was the cheapest. In a later period, they switched to the energy-intensive one. True or False: This switch in technology would have been profitable even if the prices of both labor and energy had simply doubled between the two periods.
Production Cost Analysis for a Cloth Manufacturer
An economic historian argues that the widespread adoption of new, energy-intensive machinery in 18th-century British textile production was driven purely by the genius of inventors creating a technologically superior method. Based on an economic model where firms always choose the production technology with the lowest total cost, which statement best evaluates the historian's claim?
Calculating Production Costs to Determine Technology Choice
Axes and Coordinates for the Technology Comparison Graph