Question

In a Malthusian world, suppose there is a one-time improvement in technology , which increases the level of output per capita for any given level of population. How will this change affect output per capita in both short and long run? Why? How will it affect the level of population?

Answer 1

In the Malthusian world, improvements in the level of technology will help increase the resource supply as well as the food available in the economy. This will lead a better standard of living in the short run. However an improvement in the level of technology will be offset by the increase in population in the long run. This means that the improvement in technology would be offset by the population growth, thereby bringing the resources to their original level.

As per the theory, technological growth is slow and because of the increase in population, this keeps the output per capita stable.