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What about the theoretical monopolist? Idle capacity is non-Islamic economic waste.
Market Structures :
(In terms of : consumer goods / productive factors)
Productive Factors: Labour, Capital, Land factors with fixed market prices Marginal productivity theory: entrepreneur has no market price as he is the employer (profit maximizing agent). Market equilibrium : VMP = Factor Price, where entrepreneur minimizes costs/ maximizes profit. Factor prices: wage rate (labour), interest rate (capital), Rent ( land). Demand/Supply analysis: Downwards demand curve / upwards supply curves for factors
Market Structures :
(In terms of : consumer goods / productive factors)
God permitted sale : sale covers all valuable assets including corpus and usufruct. Productive resources: Labour, Capital, Land, and Entrepreneur ( Management) Economic organization: Involves the profit sharing option - profit-maximizing entrepreneur is not the fixed rule. Labour : wage rate (khas)/ mushtarac) or profit sharing Land : fixed rent or profit sharing (jurist controversy) Management: fixed salary or profit-sharing note the jurist difference between Labour and Management Capital: The most significant point of departure.
Market Structures :
(In terms of : consumer goods / productive factors)
Lending : applies only to fungibles as a means of ownership transference (all jurist schools). Money : is a fungible object, therefore, borrower is entitled to all the profit (al-kharaj bi al-daman). General principle: return of a factor goes to its owner should also apply to capital. How capital participates in production: through renting of real asset ( sale of usufruct ) or supplying ones money while maintaining ownership. Therefore : the interest rate is not a return on capital mudarabah is the logical alternative.
The End
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