Technology plays a big role in how much it costs to make products in the long run. It helps improve productivity, efficiency, and how businesses operate on a larger scale.

Here are some key points about this:

1. Increasing Productivity:

   • New technologies like automation and artificial intelligence (AI) help workers be more productive.
   • For example, in the U.S. manufacturing industry, productivity increased by about 3.5% each year from 2009 to 2019 because of these tech improvements.
   • This means that companies can make more products without using more resources, which helps lower costs.

2. Lowering Costs:

   • New technology often makes production cheaper.
   • For instance, 3D printing has made it less expensive to produce different goods.
   • Ford even mentioned that they saved 25% on costs for making prototypes using 3D printing.
   • Also, as companies grow and produce more, their average costs per item can go down since they spread out their fixed costs over a larger number of products.

3. Better Quality:

   • New production methods can lead to better quality products.
   • This allows companies to charge higher prices.
   • For example, Tesla uses advanced battery technology to make electric cars that have a better range and performance than others.

4. Investing in Research and Development (R&D):

   • Long-term costs are also affected by how much companies spend on research and development.
   • Industries that invest a lot in R&D, like pharmaceuticals, typically spend about 15% of their sales on it.
   • This spending can lead to new technologies that help lower costs over time.

5. More Competition in the Market:

   • When new technologies appear, companies face more competition, which pushes them to improve and lower their prices.
   • A study found that 80% of European companies that used new technologies reported lower costs on average over five years.

In summary, changes in technology lower long-term production costs by boosting productivity, cutting costs, improving quality, and increasing competition in the market. This all helps shape how products are made in our changing economy.