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Additional resources for Debunking Economics: The Naked Emperor of the Social Sciences
This falling productivity translates into a rising price. There is thus a direct link between what economists call ‘marginal productivity’ – the amount produced by the last worker – and ‘marginal cost’ – the cost of producing the last unit. Table 1 shows an example of how economists conceive of production. This mythical firm has fixed costs of $250,000, and pays its workers a wage  of $1000. It can sell as many units as it can produce at the market price of $4. To produce output at all, the firm must hire workers: with no workers, output is zero.
If you tried to generate an overall social utility map by considering all possible prices for bananas and biscuits, it would therefore be extremely jagged. Rather than being the smoothly upward sloping hill that economists visualise, it would look more like a mountain range undergoing a catastrophic earthquake. The resulting set of indifference curves, rather than sloping smoothly, might resemble numerous contour maps of the Himalayas from different geological periods, superimposed haphazardly over each other.
They do this by tracing one individual’s Engels curve, and then adding on the next individual’s at the height of its predecessor, and so on (more sophisticated ways of adding together individuals will have the same result as this simple one). Clearly this ‘social Engels curve’ is going to have lots of places where the slope of the curve changes abruptly rather than smoothly – as you move from one individual’s contribution to the next. This generates a curve like that in Figure 12. Figure 13: Kinks in the ‘social Engels curve’ if consumers have different preferences The problem is that these abrupt steps along the Engels curve require similar irregularities in the social indifference map.