Lesson plan
Complementary assets
Complementary assets are assets that when owned together increase the value of the combined assets. It is defined as “the total economic value added by combining certain complementary factors in a production system, exceeding the value that would be generated by applying these production factors in isolation.” Thus two assets are said to be complements when investment in one asset increases the marginal return on the other. On the contrary, assets are substitutes when investment in one does not affect the marginal return of the other. The production process is described by the production function F(x,y) , where x and y are the amounts invested of the two assets, then it is possible to define formally the elasticity of substitution as : \sigma_{xy}=\frac{d \ln (y/x) }{d \ln (MRT_{12})} =\frac{d \ln (y/x) }{d \ln (F_{x}/F_{y})} If \sigma_{xy} is equal to 1, the assets are substitutes; if lower, complements; if higher antagonists.
Article summary
Complementary assets are assets that when owned together increase the value of the combined assets. It is defined as “the total economic value added by combining certain complementary factors in a production system, exceeding the value that would be generated by applying these production factors in isolation.” Thus two assets are said to be complements when investment in one asset increases the marginal return on the other. On the contrary, assets are substitutes when investment in one does not affect the marginal return of the other. The production process is described by the production function F(x,y) , where x and y are the amounts invested of the two assets, then it is possible to define formally the elasticity of substitution as : \sigma_{xy}=\frac{d \ln (y/x) }{d \ln (MRT_{12})} =\frac{d \ln (y/x) }{d \ln (F_{x}/F_{y})} If \sigma_{xy} is equal to 1, the assets are substitutes; if lower, complements; if higher antagonists.
Key claims
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Discussion questions
- Summarise the article in your own words. Which single claim would you verify first, and why?
- Which claim in this article is most likely to be revised as the sources update? How would you check its current status?
- If two sources disagreed about one of these facts, what would you need in order to trust one over the other?
Bibliography
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Key claims and bibliography are generated from the same tracked claims and sources as the article page.