Suppose it is 1905 and you are a buggy whip manufacturer. You hear a commotion o
ID: 1216001 • Letter: S
Question
Suppose it is 1905 and you are a buggy whip manufacturer. You hear a commotion outside and learn that a gas operated machine (car) had frightened a horse drawn carriage. You then look at your inventory of leather buggy whips and say to yourself (expletive deleted). Again, it is 1905, you leave work and go home for dinner. You say to your wife "wife, you are not going to believe what I saw today. I see the future and buggy whips will soon be obsolete. " Hint: apply this scenario to Schumpeter's concept of "creative destruction".
UNDER THE OPPORTUNITY COST THEORY IM THINKING OF DOING SOMETHING WITH THE LEATHER TO CREATE A NEW PRODUCT. IM THINKING THAT BACK IN 1905 THERE WAS A SUCH THING AS WHEELS OF COURSE FOR AUTOMOBILES BUT WHAT IF THERE WERENT ANY AUTOMOBILES. ALSO BUGGY WHIPS WOULD HAVE BECOME OBSELETE BECAUSE OF THE AUTOMOBILE.
ANY SUGGESTIONS?
Explanation / Answer
This is wrong on your part ! Both the horses and automobiles should be allowed to operate. Poor people can't afford expensive automobiles which cause lot of pollution. Because of increased demand for automobiles there is the problem of pollution, space, congestion etc. Moreover the costs of automobile parts are more than a horse carriage. If subsidies are provided for automobiles yet there is problem of diminishing social benefits. Fresh air and natural habitats are essential because they improve health.