Answer to Question #49621 in Economics of Enterprise for ObiJuru

Question

Will computers and other new technology improve efficiency and hence reduce costs, or will they improve quality and hence raise costs?

Answer 1

In economics, the Jevons paradox is the proposition that as technology progresses, the increase in efficiency with which a resource is used tends to increase (rather than decrease) the rate of consumption of that resource. So, computers and other new technology will improve efficiency and hence reduce costs, but this will cause the increased use of some resources.