Complementarity and Substitution in the Theory of Capital

Title: Complementarity and Substitution in the Theory of Capital
Category: Law & Government / Government & Politics | Words: 336 | Pages: 1.4 (approximately 235 words/page)

Complementarity and Substitution in the Theory of Capital

This essay is an explanation and importance of complementarity and substitution in the theory of capital. Complementarity can be usually seen in goods with “sympathetic shifts in demand.” It is also important to realize the narrowness of the traditional treatment of complementarity. Complementarity is analyzed in a single enterprise and also in the economic system as a whole. In the latter complementarity is analyzed in an economic system in equilibrium and also in disequilibrium. In …showed first 75 words of 336 total…

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…showed last 75 words of 336 total…is not in static equilibrium. It is useless to view capital change as quantitative change in one factor and supposing that other factors remain constant. An important topic in the capital theory is the internal capital change, which is the reorder of existing capital for unexpected change. And finally, all that has been mentioned is not only essential in the theory of capital, but also has a great importance in the theory of industrial fluctuation.

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