Technology can change production methods, improve productivity, quality and efficiency.
Improving efficiency by reducing waste
Increasing production capacity through capital intensive production
Introducing new production methods that improves quality
Enabling labour mobility, reducing dependency on labour for production
Improving efficiency by reducing waste
With the introduction of new recycling technologies, waste from production could be sold or re-used and reprocessed into new products. Computer automation may also ensure machines calculate and measure accurately, optimizing material use, while reducing waste. Accurate amount of material use can be determined, enabling lean production practices such as Just-in-time. This would reduce the cost of production while reducing waste landfill.
Increasing production capacity through capital intensive production
Automation could enable factories to operate 24-hour a day, as machines could function without human supervision. This would increase production and reduce the average cost as idle time reduces. Labour productivity would increase, while reducing dependency on human labour, enabling factor substitution.
Improving quality with new production methods
Technological spillovers could happen when the outcome of research and development result in improved quality of materials used in production and new methods of production. This could increase both quality of product and improve efficiency.
RELATED CONCEPTS
Production methods
Lean production practices
Capital intensive
Efficiency
Productivity
Quality
PAST YEAR EXAM QUESTIONS
Identify and explain two ways (other than new technology) could be used to increase output. (4 marks) May/June 2019/12
Identify and explain two ways changes in technology used in production could help a firm to remain competitive. (6 marks) Oct/Nov 2019/11