| Abstract: | The author shows that the effect on the product-capital ratio of an increase in the profit rate from below to above the rate that marks the switching from technique I to technique 11 can be geometrically split up into i) two price effects resulting from price changes within each technique and ii) an intermediate real effect, in general well-behaved, consequent to the switching from the first to the second technique. The product-capital ratios can be correctly determined, and are as such “invariant” with respect to the numéraire chosen, only if derived from wage curves that are constructed by assuming as numéraire a basket whose composition is the same as the net product. This does not invalidate the proposition that the capital-product ratio, conceived as the value of capital per physical basket of product, and its response to a rise in the profit rate vary with the numéraire chosen. |
