Prices of production

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juliusSchool of Salamanca

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Prices of production. 1 connected concept: Cost-of-production theory of value (related to).

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Community · Cost-of-production theory of value

Key points5

Defined as cost-price plus average profit.
Functions as a supply price for goods and services.
Ensures a normal profit rate on invested capital.
Central to Marx's critique of political economy.
Explains the mechanism of profit equalization across industries.

Summary

Prices of production is a concept in Karl Marx's critique of political economy, defined as "cost-price + average profit".

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Connections1

Related toCost-of-production theory of value85%
central concept derived from production costs
In classical economics, the natural price is the long-term equilibrium price of a good, which is determined by the sum of the costs of production, including wages, rent, and profit.
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Overview

The prices of production is a specific economic concept developed within Karl Marx's critique of political economy. It is defined mathematically as the cost-price plus the average profit, representing the necessary price level for a producer to achieve a standard return on their invested capital.

This concept functions as a type of supply price, indicating the threshold at which newly produced goods and services must be sold to remain viable in a competitive market. By focusing on the equalization of profit rates across different sectors, the theory explains how market prices deviate from individual labor values to maintain a consistent average profit rate.

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SourcesWikipedia

Facts