Man, Economy, and State with Power and Market

(1) they may provide a greater production of the same good per unit of time; or (2) they may allow the actor to consume goods that are not available at all with shorter processes of production.

Then, as his consumption of leisure increases, the marginal utility of leisure will decline, while the marginal utility of the goods forgone increases, until finally the utility of the marginal products forgone becomes greater than the marginal utility of leisure, and the actor will resume labor again.

Where labor does provide intrinsic satisfactions, the utility of the product yielded will include the utility provided by the effort itself. As the quantity of effort increases, however, the utility of the satisfactions provided by labor itself declines, and the utility of the successive units of the final product declines as well. Both the marginal utility of the final product and the marginal utility of labor-satisfaction decline with an increase in their quantity, because both goods follow the universal law of marginal utility.

people work only when they value the return of labor higher than the decrease in satisfaction brought about by the curtailment of leisure.

The relationship that always holds mathematically between the average and the marginal product of a factor is that as the average product increases (increasing returns), the marginal product is greater than the average product. Conversely, as the average product declines (diminishing returns), the marginal product is less than the average product.

change in the value of the product causes a greater change in the value of the specific factors than in that of the relatively nonspecific factors

the relation between convertibility and valuation

another way of increasing his production is to improve his technical knowledge of how to produce the desired goods—to improve his recipes.

One method, then, by which man may increase his production per unit of time is by increasing his expenditure of labor.

Since the marginal utility of each good is equal to the value of the least important end of which he would be deprived, he compares the marginal utility of X with the marginal utility of Y. In this case, the marginal unit of X has a rank of X-4, and the marginal unit of Y has a rank of Y-3. But the end Y-3 is ranked higher on his value scale than X-4. Hence, the marginal utility of Y is in this case higher than (or greater than) the marginal utility of X. Since he will give up the lowest possible utility, he will give up one unit of X. Thus, presented with a choice of units of goods to give up, he will give up the good with units of lowest marginal utility on his value scale