What is the difference between intensive margin and extensive margin?

What is the difference between intensive margin and extensive margin?

The concept of extensive margin is also crucial in analyzing world trade. In this context, extensive margin refers to whether a trading relationship exists, whereas intensive margin refers to how much is actually traded in that trading relationship.

What is the intensive margin in economics?

About.com (reference below) defines intensive margin as the degree (intensity) to which a resource is utilized or applied. For example, the effort put in by a worker or the number of hours the worker works. This is contrasted with Extensive Margin.

What is extensive margin of cultivation?

1. Rent in Extensive Cultivation: Extensive cultivation refers to the farming system under which in order to increase the agricultural production, the area under cultivation is extended. ADVERTISEMENTS: Therefore, under extensive cultivation, more output is produced by increasing the quantity of land.

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How do you calculate intensive margin?

Calculating intensive and extensive margins

  1. Intensive Margin = sum of sales of those products that a firm produce in both periods t and t-1.
  2. Extensive Margin = sum of sales of those products that a firm produce in year t or in year t-1, but not in both the periods.

What is Labour intensive and Labour extensive?

Key Takeaways. Labor intensive refers to a process or industry that requires a large amount of labor to produce its goods or services. Labor costs encompass all of the costs necessary to secure the human capital necessary to complete work.

What is extensive cultivation in economics?

extensive agriculture, in agricultural economics, system of crop cultivation using small amounts of labour and capital in relation to area of land being farmed. The crop yield in extensive agriculture depends primarily on the natural fertility of the soil, the terrain, the climate, and the availability of water.

What is rent for surplus theory?

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According to Ricardo, rent is that portion of the produce of the earth, which is paid to the landlord for the original and indestructible powers of the soil. It is a surplus enjoyed by the super marginal land over the marginal land arising due to the operation of the law of diminishing returns.

What is the difference between labor-intensive and capital intensive?

Capital intensive refers to the amount of capital invested so as to increase the revenue and profit whereas labour intensive refers to amount spent on training to labour so as to increase the efficiency of labour which will ultimately result in the increased production.

What is difference between intensive and extensive cultivation?

Intensive farming is a method of agricultural production that requires a lot of inputs to maximize productivity of a small piece of land. Conversely, extensive farming or agriculture is practiced over large swathes of land, with little to no inputs and produces a lower yield per hectare.

What is the difference between intensive cultivation and extensive cultivation?

Intensive Farming refers to an agricultural system, wherein there is high level use of labor and capital, in comparison to the land area. Extensive Farming is a farming system, in which large farms are being cultivated, with moderately lower inputs, i.e. capital and labor.

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What is an intensive margin?

Intensive margin refers to the degree (intensity) to which a resource is utilized or applied. For example, the effort put in by a worker or the number of hours the worker works. Contrast extensive margin.

What is initial and maintenance margin?

Maintenance margin also sometimes referred to as variation margin is the amount of margin that is needed to maintain a position (remain invested in a trade). Initial margin is always higher than maintenance margin, so for as long as the initial margin is covered you do not have to worry about the maintenance margin.

What is an extensive margin?

Extensive margin refers to the range to which a resource is utilized or applied . For example, the number of people working is one measure that falls under the heading of extensive margin.