Technological Change: Invention, Innovation, and Market Incentives

The video explores the distinction between invention and innovation, using examples like the telephone and iPhone. It discusses the impact of technological change on consumer choice and GDP, highlighting process innovation's role in productivity, exemplified by Ford's mass production. The video also examines how governments and market structures can encourage technological change through patents, tax incentives, and support for entrepreneurs.

What is the primary difference between invention and innovation?

• Invention is about improving existing products, while innovation is about creating new ones.

• Innovation is about creating new products, while invention is about improving existing ones.

• Invention involves creating something entirely new, while innovation focuses on improving existing products or processes.

• Invention and innovation are the same concepts.

Which of the following is an example of an invention?

• The invention of the telephone by Alexander Bell

• The improvement of a car engine

• The development of the iPhone 3G

• The release of a new smartphone model

How does technological change affect consumer choice?

• It has no impact on consumer choice.

• It improves consumer choice by offering better products compared to older ones.

• It limits consumer choice by reducing the number of available products.

• It makes products more expensive, reducing consumer choice.

Why might improvements in technology not be reflected in GDP figures?

• Because technological improvements often lead to higher prices.

• Because GDP figures are not updated frequently.

• Because GDP only measures the quantity of products, not their quality.

• Because improved products may be cheaper, contributing less to GDP.

What is process innovation?

• Improving the way a product is marketed.

• Developing a new business model.

• Creating a new product from scratch.

• Enhancing the method of production to increase efficiency.

How did Ford's production line impact car manufacturing?

• It increased the time taken to produce each car.

• It reduced the cost and time of car production significantly.

• It made cars more expensive.

• It decreased the quality of cars.

What is one way governments can encourage technological change?

• By discouraging competition in the market.

• By providing patents to protect new inventions.

• By increasing taxes on research and development.

• By limiting the number of new businesses.

How do patents encourage innovation?

• By providing temporary monopoly power and profits.

• By reducing the cost of production.

• By eliminating competition entirely.

• By allowing firms to copy each other's products.

Which market structure might not incentivize innovation due to lack of competition?

• Free markets

• Oligopolies

• Monopoly markets

• Competitive markets

What role do entrepreneurs play in technological change?

• They only work in large corporations.

• They have no impact on technological change.

• They drive innovation by starting new businesses and developing new ideas.

• They hinder innovation by focusing on profits.