Question

• Innovation and physical capital are 2 of the 4 factors of production. Discuss some specific ways that 1 of the following laws increased the productivity of 1 or both of these factors of production:
  • 1862 Pacific Railway Act
  • 1956 Federal Aid Highway Act
  • 1946 Federal Airport Act
• What other examples of economic concentration can you share?
• What are the risks and advantages to economic concentration?
• How has economic concentration influenced your industry?

Answer 1

1956 Federal Aid Highway Act, was enacted under President Eisenhower, which proposed building of approximately 40,000 miles of interstate highway system in 10 the next ten years across the country in order to make it easier to transport goods as well for passenger travel, thereby making it easier to do business, by reducing cost and time in travelling peole as well as goods from one place to another across the country.

By reducing transportation time and cost it greatly increased productivity of physical capital for businesses.

Other examples of economic concentration is the defence industry. The firms manufacturing state of art defence systems in the world have massive amount of capital at their disposal to innovate, to invest and to build best weapons in the world.

Some risks with economic concentration is domination and manipulation by large firms which may kill the competition in the industry.

Advantages of economic concentration is that it leads to capital accumulation which creates innovation and leads to technological improvement over time.

Most of the industries have been benefitted in the form of higher productivity due to economic concentration.