Introduction

This course looks at the role of innovation in the development of industries and considers how production costs change as sales increase and as new technology is introduced into the production process. It looks at the relationship between consumer demand for a good and that good's price, and at how the relation between output and production costs in different markets can dramatically affect industry structure. In describing these issues, the course introduces the range of activities that constitutes economics: formulating theories, modelling, debate and persuasion, analysis of data, understanding the behaviour of economic institutions such as companies and households, and analyzing economic processes. It also seeks to show how all of these economic techniques can be used to build up a rich understanding of innovation and economic change.

Course learning outcomes

• Appreciate the importance of technological change, costs of production and consumer preferences to the changing organization of production
• Understand the relation between the quantity demanded of a good and its price as represented by the demand curve
• Understand economic models of the relation between firms’ costs and output
• Analyze the role of technology and costs in influencing industry structure over the life cycle.