Adding-Up Problem

Discipline: Economy

Adding-up Problem, also known as Euler's Theorem, is a problem of the economics of production, and is introduced by the English economist Philip Wicksteed (1844-1927).

Adding-up Problem holds that it is very difficult to ensure whether adding together different factors of production equals to the national income.

If each factor of production is paid the value of its respective marginal product, cetris paribus, a situation will eventually arise in which total product (total income) will be exhausted.

Philip Wicksteed (1844-1927) studied the adding-up problem in the model of a long-run economy in perfect competition.

The Swiss mathematician Leonhard Euler (1707-1783) argued that the way factors of production are combined to produce output must also be taken into consideration to understand how the sum of income earned by individual factors of production equals to national income.


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