Equation (10) now becomes
SAY -
aE]
(.1)
This is again an implicit multiplier equation.
The term on the right hand side can be regarded as
am index of the growth of capital, if capacity is assumed
to grow in proportion to capital ( Harrod's neutrality )
The implicit multiplier is the distribution parameter
(1 = £ ) which is the ratio of profit to price -
the profit margin - in the various lines of production;
A ———————————— Pr
this is (multiplied by the utilisation rate, and)weighted
I Sn eee er ee mr = + a el” In
by the preoduets' share in the total capaciiyly.
—— Jv SVE m Ling? Ss
Equation (11) says nothing about how the growth rate
an % oe,
[I + C
_— is determined. To start with it is assumed to
Y #
J hw
r zur
be given by the rate of innovations and by a kind of
self-perpetuating force of the long run growth in the past.
The equation (11) should serve to illustrate the role
of the distribution parameters.
If some of the gross profit margins ( mark-ups ) increase,
given the growth rate of the capital, then some of the
utilisation rates will have to decrease in relation to
the break-even point ug. But the break-even point will
itself also have to decrease, as can be seen from
gross
equations (4) and (8) ‘unless the increase in profit margins
LT el Tn fixed cost as a ratio of Lote
/ 7 SR A RW
> © A
m x I SZ I
capacity { du cdma I
(
3.
a. ) u, = gl, [/
i)
Z
/
(12)
Thus as long as the increase in gross profit margins „
Crew yl
NAC
J ’ -&
eo.
(br
A
les
I)
N
A
Gud