"matter processors" what are those? or are you asking us to draw conclusions & make assumptions based on wibni ("wouldn't it be nice") & magic sci fi technologies that don't & may never exist? if you are that's fine but it would be nice to know what angle to approach it on.

@Pelinore In my thinking matter processor = Ore & regolith refining into ingots or metal beams, or sheet metal.

So a whole slew of separate installations for different materials using real world technology rather than something from star trek, good to know.

May go as far as solar panels or microchips, depending on how sophisticate the factory is.

I suspect that, after several generations, the genetic makeup of expressed genes in spacers will become so radically different that Earthers that future generations of 'made-in-space' humans will not be able to return back to Earth. In time, they will evolve into a different sub-species of humans. I suspect that, with the tendency to 'survival of the species', their reproduction rate will go back up to ten, twelve children per mother.

@JustinThymetheSecond I suspect birth rates won't climb that high, not when you have to earn the very air that every child you have breathes, a lot of counter pressures to a large number of useless (for the first 10-14 years at least) asset sinks in the likely early situation you've just skipped past & ignored.

@Pelinore That entirely depends on which system dominates - socialism and social responsibility, or Americocracy and 'profit at all costs'. Win-win, or win-lose winner takes all loser loses everything.

@JustinThymetheSecond How will either system effect the economic realities, i just don't see it being affordable for a society to have as many as 5 children per adult when you have to manufacture the air they breath, there just wouldn't be enough available man-hours from adult workers to sustain it, heavy automation & much better AI than we have now might solve that of course.

Tangential to Starfish's answer, space is rubbish for machines too. We're a long way from automated systems that can maintain themselves against earthbound wear and tear, let alone the problems that occur in space. As I recently pointed out to a similar question, manufacturing microchips currently requires minerals from at least three continents. Plopping a factory down on one part of the moon ain't gonna cut it.

@Pelinore It's all about the equitable distribution of resources vs 'the one who dies with the most toys wins' approach. Earth has always had enough resources they were just unequally distributed into bubbles and voids.

@JustinThymetheSecond no it's not, it's all about the maximum available resources, how they're distributed among the population is entirely irrelevant to anything I've said

@Pelinore As we have always seen on Earth, it is about who controls the availability if resources and who controls 'scarcity'. Production has always traditionally been manipulated to control supply and demand, in order to bolster prices. Diamonds are far from scarce, but the control of supply makes them so.

For the record, and IMO: (a) That was a very wordy post, (b) Most of the post has nothing to do with the question (other than to, hypothetically, rationalize asking the question). You could delete everything but the last paragraph and the question would not be worse. Finally, (c) the cost of in-space habitation will never be cheaper than on-earth habitation due to transportation costs. There may be political reasons for doing it, but there will never be economic reasons for it. Spaceflight will never be cheaper than driving a truck.

@JBH Ooh, nice trap :)) "delete everything but the last paragraph and the question would not be worse" I'm pretty sure it would be closed as too broad & needing focus if that last paragraph (from "My question is" yes?) was all there was, I do think it is too wordy & could do with pruning though.

@Pelinore I almost voted to close as too opinion-based. See my answer.

@jdunlop, for a typical factory, the mass of microchips needed to run it is a trivially small fraction of the total mass. Those items that are difficult to manufacture can be imported if it is cheaper to do so.

It is a good question and very nicely written and touching important moments, nothing can be cut out of it, so on that, I completely disagree with JBH

"At this point in time, it appears plausible to imagine that the first demonstration refineries and matter processors would be on the Moon before the decade is out. " Colour me skeptical.

"With better automation, costs might be even smaller per Kg from the asteroid belt, since despite the distance the delta-v budget is even smaller." My KSP is showing, but don't forget that for transfers that originate on a higher solar orbit than Earth, you can't just rely on aerobraking as you enter way too fast to both (a) guarantee that you get captured while also (b) not breaking or incinerating the vehicle. Relatively speaking, a lunar return has less issues in this regard, so an asteroid return mission might end up costing more dV by needing to slow down before re-entry.

As soon as you've got the first self-sustaining off-world colony, a major cataclysmic event could wipe out the whole of the earth-based population, leaving it easily exceeded by however whatever minimum number is necessary to sustain the off-world population. But as that's a well-trodden trope, I guess your premise is that Earth's population will remain pretty much "as normal".

My initial thought was humans do nothing better than reproducing... my second thought was except that we're slowing down now.

@Flater interesting -- have to confess had never thought about that.

@JBH I could, but then you'd vote to close the question for showing insufficient research. In the "wordy" section, I point out that a)costs are decreasing and with manufacturing on the moon could decrease much further, and yet that b) there seems to be no rationale for permanent residential habitats in space (i.e. outside of outposts with life support for technicians to do maintenance and go home)

...since you'll always find that colonizing the suburbs, then the Gobi desert and the Siberian tundra is cheaper and easier. So how does one bootstrap human habitation in space -- I suggested the coolness factor and NIMBY earthers.