Economics as She Is Spoke

2008-06-16 · Original WordPress address

Here is the proof. Take the good whose price falls with respect to all other goods' prices in the economy. The percent change in that good's price must be a weighted average of the percent change in the prices of its inputs. This means that there must be at least one input or factor whose price falls by more (in percentage terms) than the output price. The owner of this particular factor must be worse off then in relation not only to that good's price, but in relation to all other prices as well.