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Empirically, one can only get as far as establishing a "grand average" for the price of an hour of work (this is often referred to in Marxian economics as the "monetary equivalent of labour time", or MELT) and one can discuss the extent to which labour is undervalued or overvalued in a relative (comparative) sense. [123]
The authors argue that, according to Marx, the value of a commodity indicates the abstract labor time required for its production; however Marxists have been unable to identify a way to measure a unit (elementary particle) of abstract labor (indeed the authors argue that most have given up and little progress has been made beyond Marx's ...
Consequently, labour power may be hired not "because it creates more value than it costs to buy", but simply because it conserves the value of a capital asset which, if this labour did not occur, would decline in value by an even greater amount than the labour cost involved in maintaining its value; or because it is a necessary expense which ...
A firm's labour demand is based on its marginal physical product of labour (MPP L). This is defined as the additional output (or physical product) that results from an increase of one unit of labour (or from an infinitesimal increase in labour). (See also Production theory basics.)
Generally Marx assumed that—irrespective of the price for which it is sold—skilled labour power had a higher value (it costs more to produce, in money, time, energy and resources), and that skilled work could produce a product with a higher value in the same amount of time, compared to unskilled labour. [27]
In this method cost is absorbed as a percent of the labour cost or the wages. (Overhead cost/Labour cost)x 100 If the Labour cost is 5000 and the overhead cost is 1000 then the absorption cost is 20%. If the labour cost of one job is 500 it will have to absorb 20% i.e. 100 as the overhead cost making the total cost to be 600.
Instead, the value of equipment and materials being used in production is conserved and transferred to the new product by living labor. For example, if a machine that is used to make cars costs $1 million and it is used to make 10,000 cars before it is worn out and replaced, then each car would have $100 worth of that machine in it (constant ...
If the business uses a room, a sewing machine, and 8 hours of a laborer's time with 6 yards of cloth to make a shirt, then the cost of labor and cloth increases if two shirts are produced, and those are the variable costs. The facility and equipment are fixed costs, incurred regardless of whether even one shirt is made.