r-JK-GT-77

unresolved I don’t understand the mathematical logic or theoretical implications of this passage.

^5c8f31

Moreover, if the output of an industry is a function $\Phi (N_r)$ of the labour employed in it, we have $\frac{1-e_{or}}{e_{er}}=-\frac{N_r{\Phi }^{\prime \prime }(N_r)}{p_{wr}({\Phi }^{\prime }(N_r){)}^2}$ where $p_{wr}$ is the expected price of a unit of output in terms of the wage-unit. Thus the condition $e_{or}=1$ means that ${\Phi }^{\prime \prime }(N_r)=0$, i.e. that there are constant returns in response to increased employment.