Technological change

Explain how technological progress can affect productivity, efficiency and firms’ costs of production.

In 2020, the market leader sold around three times as many vacuum cleaners in the UK as its closest rival. The market leader’s dominance was built on technical innovation, protected by legal patents. However, rivals have developed their own designs and are now challenging the market leader.

What feature of competitive markets does this illustrate?

Evaluate the view that technological change tends to bring industries closer to the market structure of perfect competition.

All other things being equal, which one of the following is the most likely consequence of technological innovation in the production process by the firms within an industry?

Explain how the data in Extract D show that workers employed in routine, repetitive work are at greater risk from automation.

Extract E (lines 14–16) states that ‘The market economy is not going to create the jobs by itself for those workers who are most affected by the change.’

Extract F (lines 4–5) states that ‘taxing productivity-enhancing tools like robots or machines makes no economic sense.’

Use the extracts and your own knowledge of economics to evaluate whether governments should allow markets to respond freely to the opportunities and challenges presented by technological progress, without any state intervention.

The table below shows possible differences between the meanings of the terms

sector.