Calculating the Incentive for Technological Adoption
A firm can produce a specific quantity of goods using two different methods. Method A is labor-intensive, requiring 4 workers and 2 units of energy. Method B is energy-intensive, requiring 2 workers and 5 units of energy.
Scenario 1: The wage for a worker is £10, and the price of a unit of energy is £20. Calculate the total cost for each method and identify which one the firm would choose.
Scenario 2: The wage for a worker rises to £30, while the price of energy falls to £10. Recalculate the costs and explain the new financial incentive this price change creates for the firm.
0
1
Tags
Economics
Social Science
Empirical Science
Science
Economy
CORE Econ
Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Ch.2 Technology and incentives - The Economy 2.0 Microeconomics @ CORE Econ
Application in Bloom's Taxonomy
Cognitive Psychology
Psychology
Related
An economic historian is investigating why a new, labor-saving, coal-powered machine was invented and widely adopted in 18th-century Britain but not in France. The historian's data shows that, at the time, British wages were significantly higher than French wages, while the cost of coal in Britain was much lower than in France. Which economic concept is most essential for explaining why the new machine provided a compelling business opportunity in Britain but not in France?
Evaluating Conditions for Technological Change
An economic model can be used to explain why firms in a particular time and place might choose to invent and adopt new technologies. Arrange the following statements into a logical causal sequence that explains how specific economic conditions create an incentive for technological innovation.
Match each economic concept to its definition in the context of explaining why firms choose to develop and adopt new technologies.
A key reason for the development and adoption of new machinery in 18th-century Britain was that the high cost of labor relative to the low cost of energy made innovation profitable.
Calculating the Incentive for Technological Adoption
An economic model is constructed to explain why firms in 18th-century Britain began adopting new, capital-intensive technologies. Within this model, which of the following is the most direct and crucial factor that creates the financial incentive for a firm to switch from a production method that uses a lot of labor to one that uses more machinery and energy?
Evaluating the Profitability of Innovation
A textile manufacturer is deciding between two production methods. Method A uses many workers and simple looms. Method B uses fewer workers but requires expensive, automated machinery that consumes a large amount of electricity. To determine which method will be more profitable, which of the following pieces of information is the most essential?
Economic Decision-Making Framework
Economic Model of Technology Choice
Economic Incentives for Technological Innovation
Explaining Differential Technology Adoption