3 
PONTIFICIAE ACADEMIAE SCIENTIARVM SCRIPTA VARIA - 2% 
year; let x denote the capacity added in the year as a result 
of new plant coming into operation; and let s denote the ca- 
pacity subtracted through the scrapping of old plant. Then 
(IV. 14) 
Av=x-s 
Correspondingly, let Al denote the increase in employment; 
let » denote the labour added to man the new plants; and let # 
denote the reduction in employment due to plant retirements. 
Then 
(IV. 15) 
Finally, let p denote the net output price, which is equal to 
the cost of labour and capital per unit of output, and let w 
denote the wage rate. Then if we multiply (IV. 14) by b and 
(IV. 15), by w and subtract, we obtain 
(IV. 16) pAy—wÂl =(px—wn)—(ps—wr) 
= (px —wn) 
if plant is scrapped when it ceases to earn a return, that is 
when ps=wr. | 
Now let us define the initial rate of return, #*, as the gross 
rate of return to capital embodied in new plant in the first year 
of its operation. Then, denoting gross investment in new plant 
by v¥, 
(IV. 1 
7) 
y* 
= (px - wn)/u* 
(pÂv - wAÂl)/v 
from (IV. 16), on the assumption that plant is scrapped when it 
ceases to earn a return. Equation (IV. 17) can be rewritten 
either as 
dV. 15) 
oF 3 gdh Le 
'1] Stone - pag. 48