Conclusion

Leading up to the Industrial Revolution in England, the price of labor (wages) began to rise relative to the price of coal (electricity). What does this means in terms of our model? It became cheaper to use technologies that required more coal and less labor. The Industrial Revolution took hold as a response to this price change.

Technology using more coal and less labor displaced the existing labor-intensive technology. To learn more about the economic causes of the Industrial Revolution, read Unit 2 of The Economy 2.0: Microeconomics by the CORE Econ team.

We are living in the midst of another technological revolution. Artificial intelligence and the Digital Revolution are changing the landscape of production and the demand for labor, with industrial processes becoming more complex and global than ever before. These rapid changes have sparked ongoing debates over technological regulation and the ethics of artifical intelligence. Understanding technological adoption and its relationship to costs remains relevant, and economic models continue to provide a useful framework for understanding the forces that drive firms’ decision-making.