EEE 410: Technology

Management
Lec 01: Economics of Technology Management
Dr. Rokonuzzaman

zaman.rokon@yahoo.com
 
Facebook page: www.facebook.com/TIPviews
Facebook group: web.facebook.com/groups/TIPviews/ 
LinkedIn: https://bd.linkedin.com/in/zamanrokon
 What is Economics?
• As per Wiki
– Economics is the social
science that describes the factors that determine t
he
production, distribution and consumption of
goods and services.
– Economics focuses on the behavior and
interactions of economic agents and how
economies work.
 Why do we study it?
-to create new wealth in competitive market
• We would like to increase both consumer and producer
surpluses (create new wealth) through technological
innovations:
– Products with better features for creating higher utility/$
• Fly same distance at less cost
– Reduce cost of production through process improvement
and taking advantage from economies of scale as well as
scope.
• Guide our decision of technology development, product
and process innovation, and setting up production
capacity through economic rational.
 Are you happy with existing job market for
EEE graduates?
• ….
Response just over a span of 24 hours
 How can you increase salary of fresh EEE
graduates?
• Ideas…
CONSUMER PREFERENCES AND THE CONCEPT OF UTILITY

• As a consumer, you make choices

every day of your life. Besides
choosing among automobiles, you
must decide what kind of housing
to rent or purchase, what food and
clothing to buy, how much
education to acquire, and so on.
Utility function: A utility function
measures the level of satisfaction
that a consumer receives from any
basket of goods. We can represent
the utility function with algebra or a
graph.
 The additional satisfaction that she receives
from consuming more of a good depends on
how much of the good she has already
consumed.
Is More Always Better?
What does the assumption that more is
better imply about marginal utility? If
more of a good is better, then total
utility must increase as consumption of
the good increases. In other words, the
marginal utility of that good must always
be positive.

Is it true for consumption of telecom

services or heating bread in toaster, or
cooling rooms?
 DEMAND AND SUPPLY in Perfect Market

Homogenous products
Many suppliers
Many buyers
CONSUMER CHOICE
How can you
change the
utility
function?
Consumer and Producer Surpluses
Consumer surplus is the difference between
the maximum amount a consumer is
willing to pay for a good and the amount he
must actually pay to purchase the good in
the marketplace. Thus, it measures how much
better off the consumer will be when he
purchases the good and can, therefore, be a
useful tool for representing the impact of
a price change on consumer well-being.
Does higher profit
mean lower
consumer surplus?
INPUTS AND PRODUCTION FUNCTIONS

How can you

change it in your
favor?
Why is it?

What is its
meaning for
software
firms?

How can you

change it?
How can you change it?
What is the Driving Force
• he fourth industrial revolution, more commonly known as “Industry 4.0,”
derives its name from a 2011 initiative spearheaded by businessmen,
politicians, and academics, who defined it as a means of increasing the
competitiveness of Germany’s manufacturing industries through the
increasing integration of “cyber-physical systems,” or CPS, into factory
processes.

• CPS is basically a catch-all term for talking about the integration of smart,
internet-connected machines and human labor. Factory managers are not
simply reimagining the assembly line, but actively creating a network of
machines that not only can produce more with fewer errors, but can
autonomously alter their production patterns in accordance with external
inputs while still retaining a high degree of efficiency.
 WEF Annual 2016 Meeting at DAVOS
• Although, discussion about AI and Robotics are dominating the talk, mostly
causing apprehension of labor intensive job loss in developing economies, can we
turn this fear into opportunity by creating new kind of jobs, most importantly
better jobs, connecting those people, who are fearful about job less, remotely to
smart machines anywhere in the world? Which will not require people to desert
their communities and force them to live and work in in-human condition.

• Moreover, strong presence of non-consumption in developing economies could

be the nursing ground for new possibilities to grow to cause disruption to old
form of industrial economy, by relieving human civilization from the curse of
industrial revolution. It depends on our imagination and policies we adopt to turn
them into real life results. Let's share our views to have better World, more
prosperous World--for all of us, particularly for the people residing at the bottom
of the pyramid, by taking the advantage from the Forth Industrial Revolution.
• The richest stand to gain more from the introduction of new
technology than those in poorer sections of society,
according to a report which warns that policymakers may be
required to intervene to tackle the widening inequality.
• The so-called fourth industrial revolution, following on from
the introduction of steam power, electricity and electronics,
will have less of an impact on developed economies, such as
Switzerland, Singapore and the UK. Emerging markets –
notably in parts of Latin America and India – will suffer
when artificial intelligence and robots become widely used,
reducing the competitive advantage of their cheap labour.
• Particularly emerging markets – such as parts of
Latin America and India – will likely suffer when
artificial intelligence and robots become widely
used, reducing the competitive advantage of their
cheap labour.
• To put into perspective, Oxford University research
states that automation will continue to put
downward pressure on the wages of the low skilled
and is starting to impinge on the employment
prospects of middle-skilled workers.
 • Fourth Industrial Revolution: Will Hands of
Robots be Curse or Blessing for the Bottom of
the Pyramid?

https://www.linkedin.com/pulse/fourth-industrial-revolution-hands-robots-curse-blessing-rokon-zaman?trk=hp-feed-article-title-publish