Production Functions and Capital Depreciation

摘要: PRODUCTION functions have two main uses in economic theory. First, they are used to determine the most efficient combination of factors for individual firm employ. Second, an aggregative production function is analyze relative shares output economy. But labor, natural resources (land), and "capital" social, institutional, physical peculiarities. Uniform analytic treatment, although elegant, can cause errors confusion. The customary inputs land, "capital," each case onus depreciation different. labor through age work has never concerned employers, because, outside slavery, no property rights their workers, this element loss ignored by national accountants. Land indestructible definition. real capital goods, available production, usually lose value as a time often use. Such consequence particular entrepreneurs general Hence analyst cannot always introduce into his he does or land. Production indicate certain input costs that be given money values. These include depend upon stock employed, amount land used, applied. mostly comprise rental interest charges-depending whether units funds hired-plus what loosely called "depreciation." In follows, distinction made between "time depreciation" on during period (which employed) "output deterioration" quantity). For being it will supposed any class assets (for example, buildings, equipment, material inventories) loses extent depends either quantity stocked employed rate output. It shown incidence arising from deterioration different resulting acquisition other goods services fuel) needed production. accountant may want know only how much firm's year. economist needs was use deterioration. A reconsideration treat measure suggests at least five common views invalid. best produce really found considering wage prices these alone, ignores cost depreciation. until aggregate stocks economy allowed change, full change falls capitalists alone. Third, not "fixed" but also working normally sources income