Technological Change – AQA Spec

Level: AS Levels, A Level, GCSE – Exam Boards: Edexcel, AQA, OCR, WJEC, IB, Eduqas – Economics Revision Notes 

What is the difference between Invention and Innovation? 

Invention refers to the process of creating a new product not already in the market, or a new production process to producing the good / service

Innovation refers to the process of improving a good / service or contributing to existing products

Technological Change can affect methods of production, productivity, efficiency and firms’ cost of production

• Improvements in efficiency and productivity can lead to lower costs of production and technological change, allowing for better quality goods / services
• New products can also be developed as a result of technological change – in addition to new markets and also the destruction of existing markets which are no longer profiting as much
• Technological change can also influence the process of creative destruction

Technological Change influences the structure of markets

Since monopolies face no competition, they do not have any incentive to innovate. This implies their costs are high and they often operate inefficiently

Oligopolies generate supernormal profits and are looking for ways to operate ahead of their competitors, hence they are always looking for ways to innovate and technological change is quite fast in this market

Next Revision Topics

• Monopoly
• Oligopoly
• Monopolistic Competition
• Perfect Competition
• Efficiency
• Contestability
• Barriers to Entry and Exit

A Level Economics Past Papers

• AQA
• Edexcel
• OCR
• WJEC