3.2 — Marginal Productivity Theory — Readings

Wednesday, October 14, 2020

Required Readings:

• Ch.9 “The Transition to Neoclassical Economics: Marginal Analysis Extended” up to Profits and Interest (p.260) in Landreth & Colander
• Ch.11 “Marginal productivity and factor prices” in Blaug

Recommended Readings:

The following Wikipedia entries can also provide more background:

• Friedrich von Wieser
• Eugen von Böhm-Bawerk
• John Bates Clark
• Phillip Wicksteed
• Francis Ysidro Edgeworth
• Knut Wicksell

Questions to Help Your Reading

• How are the prices of factors of production (land, labor, capital, etc) determined?
• What is the problem of imputation?
• What is marginal (physical) product? What is average (physical) product?
• What are returns to scale? How are they different from economies of scale?
• How does the assumption of competitive markets affect the answer to many of these questions?
• What is “product exhaustion?”
• Is there a moral connation of factors of production being paid their marginal products?