Britain's Technology Choice in the 17th Century: The Era of Technology B

Britain's 18th Century Shift to Energy-Intensive Technology A

In 18th-century Britain, firms adopted the energy-intensive 'Technology A' because labor was expensive relative to energy. Imagine a hypothetical scenario where, in the mid-18th century, a massive influx of labor caused wages to plummet, while a new tax made coal (energy) significantly more expensive. According to the economic model of technology choice, what would be the most likely response of a cost-minimizing firm?

Consider a firm in 18th-century Britain where labor costs were high relative to energy costs, creating an incentive to adopt a more energy-intensive, labor-saving technology. According to the economic model of technology choice, this incentive would disappear if the prices of both labor and energy were to double.

Analyzing Technology Adoption in a Hypothetical Economy

An economic model explains the technological shift in Britain between the 17th and 18th centuries based on the changing costs of production inputs. Arrange the following events to accurately describe the causal chain of this historical economic transition.

Evaluating Drivers of Technological Change

Explaining Britain's Technological Shift

Analyze the relationship between relative input prices and technology choice. Match each historical or hypothetical economic scenario with its most likely outcome according to the model of technology choice, where firms seek to minimize production costs.

An economic model explains that in 18th-century Britain, firms were incentivized to adopt new, more energy-intensive production methods. This shift occurred because the cost of ______ had become significantly high compared to the cost of energy.

Consider the economic model explaining technology adoption in 17th- and 18th-century Britain. The model suggests that the shift to more energy-intensive production in the 18th century occurred because this technology was fundamentally more productive, and therefore would have been the least-cost option in the 17th century too, had it been widely available.

Evaluating a Business Strategy in a Changing Economy

Figure 2.14: A Model of Technology Costs for Producing 100 Metres of Cloth in Britain (17th-18th Centuries)