The ratio is the slope of the budget line. It is negative
because, with a fixed budget, one must consume less C in order to
consume more F. In other words, Equation 12.3 says that the
negative of the slope of the budget line is the ratio of the absolute
prices (i.e., the relative price). Although prices do not show
directly in Figure 6A-3, they are implicit in the budget line: Its
slope depends solely on the relative price, while its position,
given a fixed money income, depends on the absolute prices of
the two goods.
13. Marginal product, as defined in the text, is really incremental
product. More advanced treatments distinguish between this
notion and marginal product as the limit of the ratio as
approaches zero.
Marginal product thus measures the rate at which total product is
changing as one factor is varied and is the partial derivative of the
total product with respect to the variable factor. In symbols,
- We have referred specifically both to diminishing marginal
product and to diminishing average product. In most cases,
eventually diminishing marginal product implies eventually
ΔC/ΔF=−pF/pC[12.3]
ΔC/ΔFΔXMP= ∂∂TLP