THE WORLD THE BOX MADE

a) I found the section on why innovations sometimes take years to take effect most interesting.  The success/effects of an innovation are often not based on the new technology itself, but on its reception.  Levinson uses the example of the light bulb to show this phenomenon.  Though Edison invented the light bulb in 1879, it took more than 20 years for society to adopt to the invention.

b)  The container not only made trade cheaper for already active trading countries, but also forced countries that secluded themselves from trade to enter the global market.  Due to significantly decreased shipping costs, foreign producers were able to sell goods at prices fractionally higher than in their own countries.  This meant that domestic firms did not have major production cost advantages over foreign firms and could not rely on high shipping costs to essentially wipe out foreign competition. They had to compete.  The container also made it possible to ship perishable goods half way around the world.  In addition, the container allowed firms to move production to wherever they could find the cheapest labor. 

c)  To measure the impact on National Income one must look at consumption, investment, government spending and net exports.  The container will shift the supply curve right, decreasing price and increasing quantity.  Depending on the elasticity of demand, this could either increase or decrease total consumption.  Investment will likely increase as firms will be spending more on the new innovation.  Governement spending has no clear change in the short run.  The impact on net exports can be either positive or negative, depending on whether the increase in exports or the increase in imports is greater.  Overall, it seems as though national income will rise as investment will rise, government spending will stay the same, and the impact consumption and net exports is unclear.   Unemployment in the short run will rise because firms need less labor to produce their goods.  In the long run, potential National Income will rise because of the increase in resources.  Unemployment, assuming mobility in the labor market, will presumably recover back to where it was before the invention.