531. J. E. Meade to Harrod , 26 February 1936 [a]

[Replies to 530 ]

Hertford College, Oxford #

26 February 1936

Dear Roy,

Thank you for your note. You are quite right in saying that the second word on p. 2 of my previous note should be "increase" and not "diminish". [1]

I do not think that your argument is strictly correct. It is surely not true to say that "if the 2 nd differential of the Ac curve is positive, ... the proportionate increase in total cost associated with a given absolute increase in output increases as output increases." For the fact that the 2 nd differential of the Ac curve is positive means simply that the absolute increase in Ac associated with a given absolute increase in output increases as output increases; and it is quite compatible with this that the proportionate increase in Ac associated with a given absolute increase in output should diminish as output increases.

Yours

James.

  1. 1. See letter 530 , and note 2 to letter 517 , [jump to page] .
    1. a. ALS, two pages on one leaf, in HP IV-745-767/10.


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