Search results
Results from the WOW.Com Content Network
The Incremental Capital-Output Ratio (ICOR) is the ratio of investment to growth which is equal to the reciprocal of the marginal product of capital. The higher the ICOR, the lower the productivity of capital or the marginal efficiency of capital. The ICOR can be thought of as a measure of the inefficiency with which capital is used. In most ...
Where the capital-output ratio will depend upon the relationship of the growth of capital and the growth of productivity. Wages and profits constitute the income , where wages comprise salaries and earnings of manual labor, and profits comprise incomes of entrepreneurs as well as property owners.
In summation, the savings rate times the marginal product of capital minus the depreciation rate equals the output growth rate. Increasing the savings rate, increasing the marginal product of capital, or decreasing the depreciation rate will increase the growth rate of output; these are the means to achieve growth in the Harrod–Domar model.
Average physical product (APP), marginal physical product (MPP) In economics and in particular neoclassical economics, the marginal product or marginal physical productivity of an input (factor of production) is the change in output resulting from employing one more unit of a particular input (for instance, the change in output when a firm's labor is increased from five to six units), assuming ...
Output per worker grows at a roughly constant rate that does not diminish over time. Capital per worker grows over time. The capital/output ratio is roughly constant. (1+2) The rate of return on capital is constant. The share of capital and labor in net income is nearly constant. The wage grows over time. (2+4+5)
Otherwise, if the cost of capital is higher, the firm will be losing profit when adding extra units of physical capital. [3] This concept equals the reciprocal of the incremental capital-output ratio. Mathematically, it is the partial derivative of the production function with respect to capital.
The diagram juxtaposes a graph which has input price ratios as its horizontal axis, endowment ratios as its positive vertical axis, and output price ratios as its negative vertical axis. The diagram is named after economists Roy F. Harrod and Harry G. Johnson ; the Samuelson-Harrod-Johnson name is in reference to economist Paul Samuelson . [ 3 ]
Pages in category "Capital (economics)" The following 52 pages are in this category, out of 52 total. ... Incremental capital-output ratio; Individual capital;