in refrigerator-sized cabinets. Through regular technological investment the microwave industry has developed into a competitive market, with small compact units in many households. Many industries have adopted the microwave through capital or research investment, applications outside the food industry include the iron and steel industry as a heating tool and the chemical industry as a tool for organic synthesis. Measurement There is no direct metric for measuring technological progress, as such workarounds based upon direct relationships between technological progress and recordable values are used. "'Investment-specific'" technological progress makes producing goods easier, as a result the price of the goods will decrease. In particular, "investment-specific" technological advance has affected the prices of two inputs into the production process: equipment and structures. If there is technological progress in the production of these goods, then it is expected the price will fall or the value of the good will rise relative to older versions of the same good. Figure 2 (the pink line) shows how the price of new producer durables (such as equipment) in the United States relative to the price of new consumer nondurables has consistently declined over the past fifty years. To calculate the relative price of producer durables divide the price that firms pay (for the durable inputs of production) by the price that a consumer of the firms product pays. Relative prices are used to represent how many units of equipment can be bought in terms of the a single unit of consumer goods.As a result of technological development, firms have been able to buy comparitevly more units of equipment for each unit of consumption, with the quality of the goods increasing while the cost of production decreases. When changes in quality are not taken into account the apparent price of equipment undergoes a smaller reduction (see the black line in Figure 2). One approach to measuring the price of technologically improved structures is to assign newer building a higher value due to the embodyment of the new technology with the design. In particular, they should rent for more, i.e. renting a square foot in a new building is much more expensive than renting a square foot in a building forty years old. Figures 2 and 3 suggest that investment-specific technological change is operating in the US. The annual rate of technological progress in equipment and structures has been estimated to be about 3.2% and 1%, respectively. References