Figure 1: The Wage-Rate of Profits Frontier
This post continues a series of posts demonstrating that the change in the economic life of a machine at a switch point
is independent of the change of the capital intensity of the technique at a switch point.
I here fill in the lower left in a a two-by-two table.
The wage curves above are for the an example with the same structure as
in the previous post
in this series.This is a ‘one-good’ model. The manager of firms know three processes to produce a widget, also known as a machine.
In the first process, labor and a new widget are used to produce new widgets and a one-year old widget.
In the second process, labor and a one-year old widget are used to produce new widgets and a two-year old widget.
In the last process, labor and a two-year old