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FACTOR PRICE: The price paid for and received by the services of factor of productions (labor, capital, land, and entrepreneurship) when exchange through factor markets. Like prices in other markets, factor price adjusts to balance the forces of demand and supply. For factor demand and the factor demand curve, the factor price is negatively related to the quantity of factor services demanded. For factor supply and the factor supply curve, factor price is positively related to the quantity of factor services supplied. The key factor prices are wage rates, interest rates, rents, and profits. The rigidity or inflexibility of factor prices is an important aspect of the macroeconomic study of the short-run aggregate market.

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TOTAL-MARGINAL RELATION:

A mathematical connection between a marginal value and the corresponding total value stating that the marginal IS the slope of the total curve. This mathematical relation between total and marginal surfaces throughout the study of economics, especially utility (total utility and marginal utility), production (total product and marginal product), cost (total cost and marginal cost), and revenue (total revenue and marginal revenue). A related mathematical relation exists between a marginal value and the corresponding average value.
The mathematical relation between total and marginal means that the slope of a total curve is the marginal value. If the total curve has a positive slope (that is, is upward sloping), then the marginal is positive. If the total curve has a negative slope (downward sloping), then the marginal is negative. If the total curve has a zero slope (horizontal), then marginal is zero. Moreover, if the total curve has an increasing slope (becoming steeper), then the marginal is rising. If the total curve has a decreasing slope (becoming flatter), then the marginal is falling.

To see the connection between a marginal and the slope of a given total, consider this general formula for calculating a marginal from a total:

marginal=change in total
change in quantity

Now consider the general forum for calculating the slope of a total curve.

slope=rise
run
=change in total
change in quantity

Is this an illusion, or are these two formulas the same? A quick check with an optometrist and psychiatrist suggests a firm grip on reality. The only possible conclusion is that these two formulas are, in fact, the same. And this means that the slope of a total is, in fact, the corresponding marginal.

To put this another way, the term "marginal" is really just another way of saying "slope." The two are really one and the same. The only conceivable difference is that slope is used when an actual graph is under discussion, whereas marginal is used when attention is turned to a mathematical equation. But, the underlying concept is the same, whether it is presented in the form of a graph or a mathematical equation--marginal is slope.

This total-marginal relation surfaces throughout the study of economics. Four of the more important total-marginal relations encountered are total utility and marginal utility, total product and marginal product, total cost and marginal cost, and total revenue and marginal revenue.

<= TOTAL FIXED COST CURVETOTAL PHYSICAL PRODUCT =>


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TOTAL-MARGINAL RELATION, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2020. [Accessed: November 24, 2020].


Check Out These Related Terms...

     | total product and marginal product | total product | marginal product | total utility | marginal utility | total product curve | total utility curve | average-marginal relation |


Or For A Little Background...

     | graphical analysis | marginal analysis | economic analysis |


And For Further Study...

     | opportunity cost, production possibilities | slope, production possibilities curve | production possibilities | short-run production analysis | long-run production analysis | consumer demand theory | law of diminishing marginal returns | law of diminishing marginal utility | law of increasing opportunity cost | total cost and marginal cost | total variable cost and marginal cost | slope, production possibilities curve |


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