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