Saturday, August 24, 2019
The Marginalists Term Paper Example | Topics and Well Written Essays - 250 words
The Marginalists - Term Paper Example This means that excess demand or supply in one market would be offset by another in a different market. The same phenomenon holds for the state of disequilibrium such that all markets exist at disequilibrium simultaneously. In his approach of returns to scale, Marshall noted that a firmââ¬â¢s productivity increase more proportionately in the short run. This occurs because of effects of specialization of labor and existence of fixed costs. In the long run, a firm experiences a proportionate increase in productivity since the fixed costs are exhausted and that the firm can no longer benefit from specialization (Canterbery 135). It is vital to note that when a firm is harnessing economies of scale, it reaches its minimum effect scale at a level that other firms cannot harness over a short period thereby causing monopoly. Clarkââ¬â¢s arguments rest on the productive capacity of the last unit of capital. In this sense, heterogonous capital goods have a form as homogenous goods (Canterbery 127). The productivity of the last homogenous quantity determines the profit. This differed from the Karlââ¬â¢s view of heterogonous goods as determination of profits. The criticism of this theory regards the fact that Clark present production units as abstract concepts that do not unify to influence
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