eco106 unit 4 discussion board types structure and production costs

Decades can pass before a new idea is developed to the point where it can be widely used. For example, the Wright brothers first achieved self-propelled flight at Kitty Hawk, North Carolina, in 1903. But their plane was very crude, and it wasn’t until the introduction of the DC-3 by Douglas Aircraft in 1936 that regularly scheduled intercity flights became common in the United States. Similarly, the development of the first digital electronic computer—the ENIAC—occurred in 1945. But the first IBM personal computer was not introduced until 1981. It wasn’t until the 1990s that widespread use of computers began to have a significant effect on the productivity of American business.

In 1999, Hershey Foods, manufacturer of Hershey’s bars and Reese’s Peanut Butter Cups, installed a new software program designed by the German company SAP to coordinate almost all of the company’s operations. Unfortunately, it took Hershey many months to get the software to work properly. During the period when the software was not working well, Hershey failed to send out some shipments, and other shipments contained less candy than they were supposed to have. Software problems made it difficult for Hershey to keep track of what it shipped and to whom. The company lost $150 million worth of sales before the problem was corrected and the software began to work as intended.

a. Define technology and technological change.

b. Was the Wright Brothers’ 1903 flight at Kitty Hawk an example of technological change? Was the development of the ENIAC computer an example of technological change?

c. Explain why the widespread use of computers in the 1990s resulted in positive technological change.

d. Did Hershey’s use of a new software program in 1999 result in positive or negative technological change?

Sources: For DC-3 and ENIAC: David Mowery and Nathan Rosenberg, “Twentieth Century Technological Change,” in Stanley L. Engerman and Robert Gallman, eds., The Cambridge Economic History of the United States, Vol. III: The Twentieth Century. Cambridge: Cambridge University Press, 2000. For Hershey: Emily Nelson and Evan Ramstad, “Trick or Treat: Hershey’s Biggest Dud Has Turned Out to Be Its New Technology,” Wall Street Journal, October 29, 1999; and “Hershey Foods Warns 1999 Earnings Will Be Worse Than Initially Feared,” Dow Jones Business News, December 28, 1999.

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