Question

What is meant by the term "creative destruction"?

How does the emergence of MP3 or iPod technology relate to this idea.

What other products or technology would also relate to this concept?

Why do we learn about this in microeconomics?

Answer 1

A) The term Creative destruction , popularly known as Schumpeter's gale, came into premise since the early fiftees of the 20th century .And it was curdled by the Austrian economist Joseph Schumpeter from the work of Karl Marx and popularized it as a theory of economic innovation. Currently it is known as schumpeters innovation theory too.
For Schumpeter, the "gale of creative destruction" describes the "process of industrial mutation that revolutionizes the economic structure from within, incessantly destroying the old one, by creating a new one" In Marxist economics this concept refers more broadly to the linked processes of the accumulation and annihilation of wealth .                                                                   B ) Mp3 or iPod technology has emerged as an innovation over the then existed radio technology . So new technology have destructed the pre existed one in a creative manner leading to a social change. C ) Transistors , resistors and capacitors had given way for the IC chip   ii )Desktops are replaced by laptops , later on palm tops started to grab space over laptops . Iii) steam engine to motor engine d ) Economics is all about the science of change . Innovations help the market to move from a state of stagnancy to a state of progress . ( Primary wave of credit inflation ) . These innovations will break the circular flow ( stagnancy ) . This is it's relevance in micro economics