Technological change can affect methods of production, productivity, efficiency and firms' costs of production
New technology changes how firms make things. It usually raises productivity — output per unit of input — and cuts costs.
Formula
Productivity = Output ÷ Input
Real World
Amazon's introduction of Kiva robots in its warehouses cut the time to process an order from 60–75 minutes to 15 minutes, raising labour productivity and reducing fulfilment costs per unit significantly.
Exam Focus
When asked to 'analyse', chain the mechanism: new technology → higher productivity → lower average costs → improved competitiveness — each link earns marks.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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