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Marginal and average productivity: technological innovation

1. What would be expected to happen to marginal and average productivity if a technological innovation that improves productivity is introduced to the production process?

2. How might diminishing marginal productivity be expected to impact the costs of production in your organization -- If not certain, choose another organization with which familiar (The concept applies to services as well as tangible products)?

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Average & Marginal Productivity

In general, the term "marginal" refers to the extra or new unit. Marginal productivity is the added sum of output that is developed from adding an additional unit of a definite input. The term "average" postulate all units. The average productivity is the entire quantity of the product divided by all input quantity. In general there exists a significant relationship between average and marginal productivity as when marginal productivity is more than the average product, the labor average productivity can be enlarged. When marginal productivity is less than average productivity, the labor average productivity can drop (The Relationship between Marginal and Average and Economies of Scale).

The total output of goods and services in the United States has grown by ten times in the last century. Part of it is due to an increase in the availability of inputs like labor and machinery. ...

Solution Summary

The expert examines marginal and average productivity for technological innovations and the impact on costs.

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