Question

discuss the difference between productivity on the extensive margin and instensive margin

Answer 1

Ans) Extensive Margin

• It refers to the total quantity of resources used. For eg÷ number of workers working in a particular unit, area of land etc.

Intensive Margin

• It refers to how much intensity of work is done, or the level of productivity per unit.

Comparison

Let us understand differences by at looking the examples÷

• ​​​​​The question of "how much" is answered by extensive margin of productivity while the question of "how much per" is answered by intensive margin of productivity.
• This implies extensive margin of productivity is an absolute term while intensive margin of productivity is relative term.
• For eg- Having 10 acre of land is extensive margin while 20 tons of production per acre is intensive margin.
• Having 1000 workers is extensive margin while a worker working ten hours a day is intensive margin.
• Just increasing the amount need not necessarily yield higher result, therefore, it becomes important to understand the difference between the two.