• Explain why an economy may choose not to adopt modern technology. Also, describe with a diagram why multiple equilibria can exist.
• What is the central insight of O-ring theory? Can such an economy lead to widespread inequality?
• Draw the Lorentz curve for an economy with perfect equality (everyone has the same income) and an economy where one person has all the money.

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An economy may choose not to adopt modern technology for several reasons 1 Cost Implementing modern technology often requires significant investments in infrastructure equipment and skilled labor If t... View the full answer