Puneet Varma (Editor)

Margin (economics)

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In economics, a margin is a set of constraints conceptualised as a border. 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.

Extensive and intensive margins

Margins are sometimes conceptualized(by David Ricardo) 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.

    • References

    Margin (economics) Wikipedia
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