In: Economics
What happens to the production function when there is a technological improvement? Why? Explain.
2. What ceteris paribus assumptions are you making when answering question 1? List all your assumptions.
3. Pick an example to analyze the overall effects of a technological improvement.
Here is an example on what I am looking here:
https://www.economist.com/news/leaders/21737501-policymakers-must-apply-lessons-horseless-carriage-driverless-car-self-driving
1 it shifts upwards. In other words more us produced by using same amount of inputs
2 we assume prices of inputs do not increase by technological change and cost of new technology is not too high relative to savings as otherwise it will not be used at all even though it might shift production function.
3 we take the example of CT scan. It combines x Ray technology with computers. It proved ground breaking because it provides more details than x rays. It helped in diagnosing cardiovascular diseases, cancer, infections, musculoskeletal diseases etc . images of blood vessels, soft tissue and bones can be obtained at same time, This was not possible with X Ray. Surgical biopsy became unnecessary. Further unlike MRI the patients do not need to be motionless during scan.
But there were some problems also. It could led to breast cancer, lung cancer etc. It is not safe for pregnant women and infants. It can also demage Dna. In recent years MRI has proved more beneficial in many aspects. However it hasn't replaced CT scan