AU13 Exam 3 ReviewHan’s answerEconomics 4130AU13 Exam 3 ReviewThe exam will have 7, 10-point questions on it from the questions below.1. Explain the importance of the following innovations to British industrialization: the Newcomen steam pump / Watt Steam Engine and Henry Court’s puddling and rolling process. Explain how innovations in industrial organization led to increased productivity in the ceramics industry.1. Steam pump: The steam pump can be used to pump water from mines. This pump was large, expensive, and required a great deal of fuel, but effective.Steam engine: The development of the steam engine facilitated the growth in factories. The steam engine could not be used in cottages; it required special facilities and it could run many machines at once. The steam engine also broke dependence of factories on water power and hence on locations near rivers.Henry Cort’ s puddling and rolling process also ended reliance on charcoal fuel. Instead, bars of pig iron were melted in this process. Ironmasters achieved economies of scale. Britain became a net exporter of iron and ironwares by 1800.2. The Ceramics industry. Productivity increases from changes in organization. Gains came from division of labor. Unskilled workers could do the grinding and mixing, allowing high- skilled workers to concentrate on shaping, designing, and glazing. Eventually inanimate power applied to grinding and mixing, but most gains came from a new division of labor vs. A single artisan doing all parts of the process.2. Explain the Putting out system (cottage industry). List and generally describe 3 of the labor-saving innovations in cotton textile production that revolutionized this industry during the 18th century. What was the impact of these inventions on the cottage industry?1）The putting out system (cottage industry). In this system, a merchant would give raw materials to individuals or families who would produce finished goods in their home or shops. The merchant then would come and collect the finished goods. Agricultural workers or their family member could engage in this activity in their free time or during the slack season for extra income.This system makes sense when the capital inputs in a production process are small, inexpensive, and individualized. 2）3 innovations:a. The flying shuttle: Carried the weft across the warp made it possible to produce wider cloth on a single loom. This increases in productivity in weaving. b. The spinning jenny: It was simply a spinning wheel with a battery of several spindles. It is powered by human energy.c. The water frame: Used rollers to stretch threads and produced a stronger thread, powered by water power. 3)Overall Impact: It increased efficiency and productivity. Labor- saving-reduced the labor necessary per unit of output. And it led to rise of factory system.Han’s answerImpact on other textile industries. Wool and linen industries adversely affected and pushed toinnovate, but changes took longer due to the traditions and regulations in these older industries, also b/c of the nature of the materials involved.Use of new methods and small inventions made spinning and weaving faster.There was a shift from the traditional cottage industry to the factory system of production, leading to availability of textiles for home consumption and export. Increased demand helped improvement of trade and quickened the pace of further inventions in the field. 3. In the Dual Economy Model, what industries would be included in the traditional sector? What industries would be in the modern sector? Aboutwhat share of the British Economy was engaged in the modern sector in 1760? What were the estimated productivity growth rates in each sector? Why did growth in National Income lag that of increased productivity in the modern sector?1) Traditional sector contained agriculture, construction, domestic industry and many trades.Modern sector contained Innovative and fast-growing industries like cotton textiles, iron smelting and refining, mining and ceramics.2) Modern sector: 10%Productivity growth rates in Traditional sector: 0.6% per annumProductivity growth rates in Modern sector: 1.8% per annum3) Since it only represented a small share of the aggregate economic activity, it had little impact on the aggregate growth rate. Abrupt changes in the growth of the agg economy in this dual sector model would be a mathematical impossibility. The small size of the modern sector prevents even phenomenal growth rates from having a large impact on the overall economy.4. What are the 3 prongs in Joel Mokyr’s theory of the “growing up” of the economy? How is this theory consistent with the estimated growth and productivity rates for Great Britain in the eighteenth and nineteenth centuries.3 prongs:1. A small sector of the economy underwent quite rapid and dramatic technological change.2. This sector grew at a rate much faster than the traditional sector so that its share of the overall economy increased.3. The technological changes in the modern sector gradually penetrated the traditional sector so that it toobecame modernized (e.g., mechanization of agriculture, domestic industry, etc.).How is this theory consistent with the estimated growth and productivity rates for Great Britain in the eighteenth and nineteenth centuries.Estimated Annual Rates of British Growth.National IncIndust. Prod.Han’s answer1700-1760 0.30% 0.62%1760-1800 0.17 1.961800-1830 0.52 3.001830-1870 1.98 3.20Describe the figure!(）））））））））) example: industry ）））） national ））））At first, both national income and industry production grow slowly. The industry production grows fast but national income grows slowly because only a small sector grows. This small sector grew at a rate much faster than the traditional sector so that its share of the overall economy increased. As a result, the share of this sector is larger. Finally, the sector’s increase leads to a great increase in national income. 5. Give details as to why each of the following may explain why Great Britain industrialized first and provide any weaknesses of each argument: geography, social forces, and government policies.Geography1. Islanda. Difficult to invade.Britain has not had a land invasion since 1066. It was insulated from the fighting during the Napoleonic wars 1792-1814. So it did not have the financial drain of defending its borders.b. Internal transportation. Coastal