Unformatted text preview: ows consumers and
producers to behave in self-interested ways
while simultaneously assuring that our
resources are used efficiently.
Chapter 2 Learning Objective 2-4 29 How do we promote technological progress? Just
as you would expect, market systems automatically
address this question as well. Technological advances
usually result in productivity gains among producers.
To state this differently, gains in technological
knowledge enable producers to use improved
technological advances to gain production advantages
because they can produce more output with no more
For example, they may either gain time efficiency or be
able to substitute technology for labor and save money
in the process. Therefore, we are able to address
integration of technological progress into the market
system automatically because we will employ whatever
makes us more efficient and yields lower production
Adam Smith mentioned an “invisible hand” that
seemed to direct economic activity when describing
the newly founded market system of America in 1776.
To comprehend exactly what he was attempting to
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