SupplyChangeTechnology

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SupplyChangeTechnology

I’m ______________________ speaking to you from Joliet Central High School, room 377 for the Institute for the Teaching of Economics in All Subject Areas. You are listening to:The Institute for the Teaching of Economics in All Subject AreasVolume Three, Issue TwoDeterminants of Supply/Change in TechnologyEntrepreneurs will forever seek to create new goods and services, improve on existing goods and services and find more efficient methods for producing goods and services. Efforts by entrepreneurs to use technology in making these things happen are commonplace. Three examples of these efforts in the course of United States History are interchangeable parts, the transistor, and the silicon chip.In1797, Eli Whitney built a factory in Hamden, Connecticut to manufacture muskets using his concept of interchangeable parts. This concept made both manufacturing and owning products more efficient and less expensive. That is, in manufacturing the focus changed from, in the case of muskets, hand crafted models to models that were produced in mass, such as the Colt 45. Assembling parts for the Colt 45 took less time and less skill than hand crafting a musket. In addition, when repair was needed, changing a part was much less costly than replacing the entire weapon.In 1948, scientists at Bell Telephone Laboratories invented the transistor, a tiny circuit device that amplifies, controls, and generates electrical signals. The transistor could do the work of a much larger vacuum tube, but took up less space. Because of the transistor, giant machines that once filled whole rooms could now fit on a desk. Calculations that had taken hours could now be computed in fractions of a second.Then, in 1958, Robert N. Noyce and Jack Kilby pioneered what is known as the integrated circuit, or silicon chip. This invention solved many of the problems associated with the transistor such as soldering connections and the potential for the soldering connections to fail. The silicon chip became the answer to “the tyranny of numbers” that first motivated these two entrepreneurs. Advances in the integrated circuit, the silicon chip, and semiconductors in general have happened at breathtaking speed. In fact, without these advances, we could only dream of making podcasts.According to economic theory, a change in technology will lead to an increase in supply. Interchangeable parts, the transistor, and the silicon chip are three examples of changes in technology that have led to increases in supply. This is shown by a shift in the supply curve down and to the right. As a result, price will decrease and quantity supplied will increase.


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