A follow-up to my ope-l 5077.
According to Ajit, "... the profit must be calculated on the real value of
investment and not on the nominal value of investment." Also according to
Ajit, "how can REAL mean 'a quantity of "numeraire" or of the standard
commodity' is beyond my capability of understanding. A quantity of numeraire
is by definition NOMINAL and not REAL."
A question: how, then, in the example under consideration, in which the
input/output relations are
280qr. wheat + 12 t. iron --> 575 qr. wheat
120qr. wheat + 8 t. iron --> 20 t. iron
is the "real" value of investment calculated? This is evidently a matter of
some importance, if profit must be calculated on its basis.
(I apologize, folks, for managing to bypass this one the first time. I don't
know how, it was staring me in the face. I must be slipping.)
Andrew Kliman