Describe the process of "creative destruction" using a specific example
What will be an ideal response?
Creative destruction, based on the ideas of Joseph Schumpeter, describes the process whereby older products are driven out of the market by newer products. New products that meet consumer wants in qualitatively better ways will increase the overall standard of living for an economy. Here are some current and historical examples of creative destruction: DVD players replaced video tapes and VHS recorders, calculators replaced slide rules, clocks replaced sundials, cars replaced horses and buggies, disposable diapers replaced cloth diapers, GameBoys and Xboxes replaced Ataris, Internet Explorer replaced NCSA Mosaic, CD players replaced tape players, indoor plumbing replaced outhouses, iPods replaced Walkmans, phones replaced the telegraph, planes replaced trains for travel, digital cameras replaced film cameras, and electricity replaced candlelight and gas lights.
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The exchange rate is volatile because
A) the demand curve and the supply curve are horizontal. B) when a relevant factor changes, demand and supply tend to change in opposite directions. C) the demand curve is vertical. D) the supply curve is vertical. E) when a relevant factor changes, demand and supply tend to change in the same direction.
Refer to Table 2-16. Does either Estonia or Finland have an absolute advantage and if so, in what product?
A) Estonia has an absolute advantage in lumber. B) Finland has an absolute advantage in lumber. C) Estonia has an absolute advantage in cell phones. D) Finland has an absolute advantage in both products.