Question

Explain from an economics point of view how innovation in production can improve efficiency, while at the same time result in displacement of resources. How will human labor be used 50 years from now?

Answer 1

Innovation in production which means technological innovation and breakthroughs, helps firms produce more goods at a faster pace and lower cost. This is a dual advantage to the firms as their cost of production would greatly fall and at the same time production would increase.

This helps firms achieve efficiency as its helps minimize costs and maximize production.

However, such innovation lead to displacement of resources for eg. Use of labor falls as more technology and software and automation is being used. For e.g. robots have replaced many labor staff in big offices, big machines have replaced need of large numbers of labor at farms or production sites etc.

While this innovation has helped reduce cost and achieve efficiency, the downside is that it has reduced need for labor and thus led to displacement of resourcess.