Margin (economics)
This article is about a concept of economic theory. For discussion of the term “margin” as used in the jargon of bourses, see Margin (finance).
In economics, a margin is a set of constraints conceptualised as a border.[1] A marginal change is the change associated with a relaxation or tightening of constraints — either change of the constraints, or a change in response to this change of the constraints.[1]
Extensive and intensive margins
Margins are sometimes conceptualized as extensive or intensive:
- An extensive margin corresponds to the number of usable inputs that are in some sense employed. For example, hiring an additional worker would increase an extensive margin.
- An intensive margin corresponds to the amount of use extracted within a given extensive margin. For example, reducing required production from a given set of workers would decrease the intensive margin.
See also
References
This article is issued from Wikipedia - version of the Thursday, April 21, 2016. The text is available under the Creative Commons Attribution/Share Alike but additional terms may apply for the media files.