Search results
Results from the WOW.Com Content Network
In economics, the cost-of-production theory of value is the theory that the price of an object or condition is determined by the sum of the cost of the resources that went into making it. The cost can comprise any of the factors of production (including labor, capital, or land) and taxation .
The production function is a graphical or mathematical expression showing the relationship between the inputs used in production and the output achieved. Both graphical and mathematical expressions are presented and demonstrated. The production function is a simple description of the mechanism of income generation in production process.
The theory entails that there is a limit to how much one factor can be substituted for another. When production reaches a point where substitution between the factors becomes impossible (MP LK), the isoquant becomes positively sloping. No rational entrepreneur will operate at a point outside the ridge lines (Region of Economic Nonsense).
In the interpretation of the currently dominant view and of a of classical economic theory developed by neoclassical economists, the term "factors" did not exist until after the classical period and is not to be found in any of the literature of that time. [7] Differences are most stark when it comes to deciding which factor is the most important.
This price equals the cost-price and normal profit on production capital invested which applies to the new output of a specific enterprise when this output is sold by the enterprise (the "individual production price" [32]). The rate of profit involved in this production price can be compared to the average rate of profit that obtains for a ...
Articles relating to the economics of production, the process of combining various material inputs and immaterial inputs (plans, know-how) in order to make something for consumption (output). Production is the act of creating an output , a good or service which has value and contributes to the utility of individuals.
Upgrade to a faster, more secure version of a supported browser. It's free and it only takes a few moments:
This theory became known as monetarism, the theory that excess currency leads to inflation. [1] He also played a part in the emergence of classical economics , [ 3 ] which meant he fought for free trade [ 4 ] and free competition without government interference by enforcing laws or restrictions .