Evaluating Drivers of Technological Change
An economic historian argues that the key technological advancements in 18th-century Britain were primarily the result of a surge in scientific discovery and the unique genius of inventors. An alternative view, based on an economic model of technology choice, suggests that these changes were an inevitable response to shifting economic conditions, specifically the rising cost of labor relative to the cost of energy.
Critically evaluate the historian's argument. In your response, explain how the principle of cost minimization and changes in the relative prices of production inputs could provide a compelling alternative explanation for the widespread adoption of new, more energy-intensive technologies during this period.
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CORE Econ
Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
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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.
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Figure 2.14: A Model of Technology Costs for Producing 100 Metres of Cloth in Britain (17th-18th Centuries)