By the value border product one understands the output, who results by the additional employment of a marginal unit of a production factor, multiplied by the goods price.

In the equilibrium the value border product of a factor of production corresponds to its price. By the example of the factor work the price (=Lohnsatz) would correspond thus exactly to the additional profit, which the person gained by her presence in the enterprise.

If WGP is > price, the border gain positively. Then it would be be worth worth to use more units of the factor in order to increase the profit further.

If WGP is < price, the border gain negatively. Then it would be be worth worth to use fewer units of the factor in order to increase the profit.

Articles in category "Value border product"

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