Lecture 6- The supply side

Question 1

What is General purpose technology (GPT)?

Answer 1

It is used to extensively discuss the role of technical change in economic growth. Can describe the changes transforming household life and ways of doing business. For example steam engine, electricity, and internal combustion engine.

Question 2

How does GPT impact user cost?

Answer 2

• A GPT decreases user costs and helps inventing/ innovating new products and processes.
• Each technology possesses these characteristics to some degree, thus a qualitative differentiation is not possible.

Question 3

List 3 characteristics of GPT?

Answer 3

i. Pervasiveness (more sectors).
ii. Inherent potential for technical improvement (decreases user’s cost)
iii. Innovation compartmentalizes (helps increasing).