How Much Is It Going to Cost for That Extra Person?

The idea of marginal product comes from the idea that we have a fixed amount of capital to which we're adding more and more labor over time. But when you look at the real world, for this to actually work, it means that firms on average must have a higher ratio of labor to machinery than is actually ideal. And if you're paying people too much or not enough, there's going to be a gap between what you pay them and how much they can do in your society. The whole thing has to be part of an economic pyramid - so I'm going to look at the foundation whatsoever. We'll take a break in about five minutes then.