Physical and Value Productivity

Physical and Value Productivity - value productivity(in...

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Physical and Value Productivity: Capital is a productive agent; so it must result into an enhanced productive efficiency in the act of production. The result of employment of machines should lead to a sizable increase in the total output produced. If a handloom factory produces 300 yards of cloth daily then, with the introduction of the powerloom, there must be net improvement in the cloth output produced such as of about 400 to 500 yards. This is termed physical productivity of capital . According to Bohm Bawerk, there must also be
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Unformatted text preview: value productivity (in terms of future utilities) of capital. This is necessary because in the act of capital formation there is considerable time lapse. Human valuation of present goods or their present consumption opportunity is relatively larger than similar but uncertainopportunities in the future. Therefore future enhanced size of goods must also compensate for such value differences. This compensation is called agio or discounting process ....
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This note was uploaded on 11/26/2011 for the course ECON MICRO ec 201 taught by Professor - during the Fall '10 term at Montgomery.

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