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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 difference in the value of the production values (the output value) and costs (associated with the factors of production) is the calculated profit. Efficiency, technological, pricing, behavioural, consumption and productivity changes are a few of the critical elements that significantly influence production economically.
To what extent production-costs and the ruling profit rates actually determine market prices for products. The relationship between hours worked and outputs produced. Whether the capitalist production system does indeed evolve historically in the way predicted by value theory. [131]
The total cost curve, if non-linear, can represent increasing and diminishing marginal returns.. The short-run total cost (SRTC) and long-run total cost (LRTC) curves are increasing in the quantity of output produced because producing more output requires more labor usage in both the short and long runs, and because in the long run producing more output involves using more of the physical ...
Labor, not labor power, is the key factor of production for Marx and the basis for earlier economists' labor theory of value. The hiring of labor power only results in the production of goods or services (" use-values ") when organized and regulated (often by the "management").
In economics, a production function gives the technological relation between quantities of physical inputs and quantities of output of goods. The production function is one of the key concepts of mainstream neoclassical theories, used to define marginal product and to distinguish allocative efficiency, a key focus of economics. One important ...
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).
the private or enterprise production price which forms the starting-point of the analysis in the first chapter. 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 ...