Identify specific examples of prominent computer hardware and software technolog
ID: 1237512 • Letter: I
Question
Identify specific examples of prominent computer hardware and software technological advances in the industry. Discuss two of the following points and apply that to your example.What is the effect of new technology on firms in the industry in the short run?
What is the effect of new technology on firms in the industry in the long run?
What is the effect of the new technology on consumers? Does that change from the short run to the long run?
What is the effect of the new technology on the greater society in the short run and the long run?
Explanation / Answer
In the long run, firms change production levels in response to (expected) economic profits or losses, and the land, labor, capital goods and entrepreneurship vary to reach associated long-run average cost. In the simplified case of plant capacity as the only fixed factor, a generic firm can make these changes in the long run: * enter an industry in response to (expected) profits * leave an industry in response to losses * increase its plant in response to profits * decrease its plant in response to losses. Long-run average-cost curve with economies of scale to Q2 and diseconomies of scale thereafter. The long run is associated with the long-run average cost (LRAC) curve in microeconomic models along which a firm would minimize its average cost (cost per unit) for each respective long-run quantity of output. Long-run marginal cost (LRMC) is the added cost of providing an additional unit of service or commodity from changing capacity level to reach the lowest cost associated with that extra output. LRMC equalling price is efficient as to resource allocation in the long run. The concept of long-run cost is also used in determining whether the long-run expected to induce the firm to remain in the industry or shut down production there. In long-run equilibrium of an industry in which perfect competition prevails, the LRMC = Long run average LRAC at the minimum LRAC and associated output. The shape of the long-run marginal and average costs curves is determined by economies of scale. The long run is a planning and implementation stage.[2][3] Here a firm may decide that it needs to produce on a larger scale by building a new plant or adding a production line. The firm may decide that new technology should be incorporated into its production process. The firm thus considers all its long-run production options and selects the optimal combination of inputs and technology for its long-run purposes.[4] The optimal combination of inputs is the least-cost combination of inputs for desired level of output when all inputs are variable.[3] Once the decisions are made and implemented and production begins, the firm is operating in the short run with fixed and variable inputs.[3][5] [edit] Short run All production in real time occurs in the short run. The short run is the conceptual time period in which at least one factor of production is fixed in amount and others are variable in amount. Costs that are fixed, say from existing plant size, have no impact on a firm's short-run decisions, since only variable costs and revenues affect short-run profits. Such fixed costs raise the associated short-run average cost of an output level over the long-run average cost if the amount of the fixed factor is better suited for a different output level. In the short run, a firm can raise output by increasing the amount of the variable factor(s), say labor through overtime. A generic firm already producing in an industry can make three changes in the short run as a response to reach a posited equilibrium: * increase production * decrease production * shut down. In the short run, a profit-maximizing firm will: * increase production if marginal cost is less than marginal revenue (added revenue per additional unit of output; * decrease production if marginal cost is greater than marginal revenue; * continue producing if average variable cost is less than price per unit, even if average total cost is greater than price; * shut down if average variable cost is greater than price at each level of output. ******** Technology and Unemployment in the Long Run As noted above, many labor leaders, business executives, labor researchers, and politicians continually predict dire consequences from technological advancement. Such predictions are perennial, but they never seem to come to pass. For example, during the last wave of technological nervousness in the 1960s, a national commission was formed to study the problem of coming widespread unemployment and make recommendations for coping with it. It concluded in 1966 that given the pace of technological change, "there is no ground for complacency."[8] Resolving the apparent paradox between the obvious historical benefits of technological advancement and the constant predictions of impending doom or, at least, significant human suffering from dislocation requires a separation of time frames and a reminder of some basic economic truths.[9] One such truth is that the major, long-run economic goal in any society is the advancement of its standard of living. Throughout history, technological advances have made more goods and services available with less effort, from the first prehistoric bone fishhooks to today's laser holography machines used to read product codes at grocery checkout counters. As noted earlier, improvements in standards of living may take two forms, or a combination of both. Output for the same employment may rise, yielding higher per capita output and consumption, or hours worked to produce the same output may fall. The evidence--more food, clothing, and television sets per person as well as the absence of twelve-hour workdays and six-day workweeks--suggests that gains from technological advancement have been taken historically as a combination of higher output and fewer inputs, but not involuntary reductions in inputs. Lured by increasing per capita output (reflected in higher real pay) and released by technology from household drudgery, women have entered the labor force in increasing numbers. On the other hand, the participation rate of men has decreased.[10] Surely, if productivity continues to be enhanced through technology, both men and women will choose more goods and services as well as earlier retirement, prolonged education, and more leisure time. It is a dream of most people to be able to have the same or greater consumption ability while working only 20 hours per week or not working at all. Technological advancement is the essential element in reducing the burden of scarce resources. ******* Technology and Unemployment in the Short Run: Distributional Effects and Rent Seeking While technological advancement over the long run does not lead to unemployment problems, but rather is the engine for higher standards of living with either more or less employment at the discretion of individuals, short-run problems may certainly arise from technological advancement if there are imperfections in labor and product markets. If there are no such imperfections, technological advancement in a given industry will not lead to prolonged or significant unemployment. With perfectly competitive markets, technological advancement in one industry simply releases labor resources for other uses, in that industry or in another. Will jobs be available in other industries? Yes. Several scenarios demonstrating this principle are possible in completely free markets. First, when technical change lowers costs in a given industry, the competitive firms comprising that industry must lower their prices, generating larger sales and an even greater need for employment. In this case, employment goes up, not down, and with the increased competition for workers, wages rise in all industries capturing some of the value of the technological change for workers. Second, when technical change in a given industry is labor saving, but its downward effect on product prices does not result in larger quantities sold sufficient to provide the same amount of employment in the industry as before the change, then temporary unemployment occurs. However, jobs are available elsewhere in competitive markets. If nothing else, wages are bid down enough in other industries to absorb the released labor But the savings in the industry where the advancement occurs must also be taken into account. Either more money goes to remaining workers in that industry, so that they raise the demand for other products, thus enabling the released labor to be employed in other industries without lower wages; or product prices are lower in the automated industry, so that consumers can buy the same amount and have income left over to demand more products from other industries, again enabling the released labor to be employed in those expanding industries without lower wages. ****Technological Advancement and the Depreciation-of-Human-Capital Argument Schumpeter argued that innovation drives any capitalist economy.[17] He also noted that innovation is a process of "creative destruction," in which new capital equipment renders old capital equipment obsolete. Implicit in Schumpeter's writings is the idea that technological advancement can also make human skills obsolete or at least depreciate them significantly. Much of the fear of human-capital depreciation may be grounded in the recent massive layoffs in the U.S. automobile and steel industries. In both cases, oligopolistic structures, coupled with government-supported multi-company collective bargaining and trade barriers, restrained innovation for many years. Companies were able to saddle American consumers with the rents they paid workers and themselves. They were also able to pass along the costs of using suboptimal combinations of labor and machines, namely, too few machines and too much labor for the given output level.