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Margin (economics)

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Margin (economics)

This article concerns a concept of economic theory. For discussion of the term “margin” as used in the bourses, see “Margin (finance)”.

In economics, a margin is a set of constraints conceptualised as a border.[1] 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.[1]

Extensive and intensive margins

Margins are sometimes conceptualized 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.

See also

References

  1. ^ a b Wicksteed, Philip Henry; (1910),The Common Sense of Political Economy Bk I Ch 2 and elsewhere.
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