ECO 365 - Week 5 Discussion Question Answers
DQ 1: What are the impacts of innovation and technology on the cost of production? How does technology affect market structure and real-world competition? Which market structure is best suited for technological innovation? Explain your answer. How has technological innovations affected your organization?
Technology impacts the cost of production. Technology helps in lowering the cost of production and making economies more efficient – producing more outputs with the same number of inputs. Producers learn more about various aspects of production in which they specialize, and this attitude of them leads to more production.
Innovation impacts the cost of production as well. Even the innovation helps in lowering the cost of production and making economies more efficient – producing more outputs with the same number of inputs.
Technology affects market structure. In today’s market world, technology advances more rapidly because individuals gain incentives, in the form of profits, to discover new and cheaper ways of doing things. Even the dynamic efficiency refers to a market’s ability to promote cost-reducing or product-enhancing technological change.
Technology affects real-world competition too. Though technological advance have no influence on perfect competitive firms, yet they have influence on monopolistic firms and oligopolistic firms. Such firms have funds for research and development. Such firms are searching for ways in order to beat up their respective competitors, and this leads them to enroll themselves in more advanced technologies.
Oligopoly market structure is best suited for technological innovation. It is so because this market structure has an incentive to innovate in the form of additional profits and because they have the profits to devote to investing in the research and development of new technologies.
Lastly, technological innovations have definitely affected my...