A Firm Has to Decide on the Kind of Technology

question 86

Essay

A firm has to decide on the kind of technology it wants to invest in.It has two options: Technology A,which is labor-saving,and Technology B,which is labor-complementary.Illustrate graphically how the equilibrium wage and employment level in the firm will change if it decides to invest in the following.
a) Technology A
b) Technology B

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Definitions:

Rapidly Changing Technology

Refers to the swift evolution and innovation in technology that impacts industries, markets, and society at large.

Natural Monopoly

A market in which a single firm can provide a good or service at a lower cost than any potential competitor, due to economies of scale.

Lower Cost

A situation where the expenses involved in producing a good or service are reduced, leading to potential savings.

Social Regulation

Rules imposed by government aimed at improving societal welfare, focusing on areas such as health, safety, and the environment, rather than on economic matters.