1. (Semi-Short Essay) Wicksteed made significant contributions to the theory of value during the marginal utility revolution. This contribution was the “product exhaustion” that we derived in class. Explain the importance of this contribution. Explain the meaning of Euler's theorem and the assumption of constant returns to scale in deriving the solution. How is this contribution similar to Marx's Problem of Transformation, and how is it different?1. As Wicksteed suggests: “The problem of the sum of the total product will be the sum of the total factor inputs multiplied by the marginal product.” This Wicksteed theory was derived from Leonard Euler's theorem. This theorem proved that product exhaustion will require a linear and homogeneous production function which will be the first degree homogeneous function. When explained, distributional shares will add to the product, with the hypothesis that the production function will be such that increasing all inputs by a constant will lead to increasing the product in the same ratio (Formaini, 2001). Product exhaustion will therefore require certain constant returns to scale in the absence of economies of scale. Wicksteed also suggested that economies will begin to manage resources in a way that helps secure the ultimate goal. The purposeful selection among various alternative applications of resources was in line with Karl's transformation problem theory (Blaug, 1997). The transformation problem is known as the rate of profit and value problem. But the problem is that industries differ at the paper level, so companies can compete based on technological progress (Schumpeter, 2006). Profit erosion and loss of market share can only be saved by innovation and technology. The process of industrial transformation from a competitive market to a monopolistic market and vice versa may be due to creative destruction. Therefore the forms will target attractive new markets and leave the markets saturated and low performing. This will make businesses sustainable but will ultimately lead to failure of the linkage system. If explained in normative terms, technological obsolescence will create a negative externality from innovations and therefore there will be a tendency for laissez-faire economies to develop as well. many innovations that represent excessive growth. Therefore the “steal of business” effect is partly offset by the fact that innovations will be too small in a laissez-faire regime.