What is average productivity? What is marginal productivity? Explain the relationship between average
and marginal productivity. What would happen to average and marginal productivity if a technological
innovation is introduced to the production process?
Average productivity means dividing total output by the number of workers while on the other hand
marginal productivity means additional output that last worker has produced. Average productivity
increases by producing more by each worker.
The relationship between marginal and average productivity is when marginal productivity decreases
the average productivity decreases as well. There is one difference that marginal productivity changes
quickly than the average productivity. The reason is because the output of last worker effect the total
output that combined with the previous workers.
Workers output increases with technological innovation. Marginal productivity can be changed in a way
that it increases rather than decreasing for the same number of workers. On the other hand average
For example, if there were 100 employees producing 1000 units per hour, average productivity is 10
units per hour. Marginal productivity of the previous employee was 5 prior to the innovation. This tells
us that marginal productivity is declining, since it is less than average production per employee. After
the innovation, we may determine that 100 workers can make 2000 units, and that the marginal
productivity and average productivity is now 20. Let's also say that the marginal productivity of the last
worker was 25. This implies that marginal productivity is increasing rather than falling as it had been