《微观经济学》课程教学资源（PPT讲稿）Chapter 6 Supply - Cost Side of Market

Chapter 6 Supply: Cost side of market

Chapter 6 Supply: Cost Side of Market

Recall: TP Curve- Total Product Quantity of wheat Marginal product (bushels Adding a 7th Quantity Quantity of labor of labor L of wheat MPL=Q/L worker leads to an increase in output (workers)(bushels)(bushels per worker) 100 of only 7 bushels. Total product, TP 19 Adding a 2nd 8o worker leads to an 17 36 of 17 bushels 345678 84 20 6 6 Quantity of labor(workers)

Recall: TP Curve - Total Product

Slope of tp curve: mP- marginal Product a The marginal product of an input is the additional quantity of output that is produced by using one more unit of that input Marginal Change in quantity of output Change in quantity of product output generated by one of labor Change in quantity of labor additional unit of labor MPL=△Q/△L

Slope of TP curve: MP - Marginal Product ◼ The marginal product of an input is the additional quantity of output that is produced by using one more unit of that input

Marginal product of labor Curve Marginal product of labor (bushels per worker) There are diminishing returns to labor 16 Marginal product of labor, MPL 0 2 5 6 7 Quantity of labor (workers)

Marginal Product of Labor Curve

Key points of TP tP first increases then max out and starts to decrease TP increases at a slower pace tP is maximized when mP=o MP is decreasing but positive when TP is IncreasIna a MP is decreasing and negative when TP is decreasing MP=0 when tp is maximized

Key Points of TP ◼ TP first increases then max out and starts to decrease ◼ TP increases at a slower pace ◼ TP is maximized when MP=0 ◼ MP is decreasing but positive when TP is increasing ◼ MP is decreasing and negative when TP is decreasing ◼ MP = 0 when TP is maximized

Diminishing returns to an Input (diminishing marginal product) a diminishing returns to an input an increase in the quantity of an input leads to a decline in the marginal product of that input, holding the levels of all other inputs fixed a Other things held constant, as more of a variable input is used in production, its marginal productivity will decline after a certain point

Diminishing Returns to an Input (diminishing marginal product) ◼ diminishing returns to an input: an increase in the quantity of an input leads to a decline in the marginal product of that input, holding the levels of all other inputs fixed ◼ Other things held constant, as more of a variable input is used in production, its marginal productivity will decline after a certain point

Total Product, Marginal product and the Fixed Input (a) Total Product Curves (b)Marginal Product Curves Quantity Marginal of whea product of labor (bushels (bushels per worker 160 140 TP 120 050 100 TP 15 8000 10 2345678 Quantity of labor(workers) Quantity of labor(workers)

Total Product, Marginal Product, and the Fixed Input

Short-Run production some inputs are fixed a Total Product: Q=f(L, K,N, E) Total product of labor Q=f(L K,N, E fixed Marginal product of labor MP=dQ/dL Average Product of labor: APL=Q/L

Short-Run Production: some inputs are fixed ◼ Total Product: Q = f (L, K, N, E) ◼ Total Product of Labor: Q = f (L) (K, N, E fixed) ◼ Marginal Product of Labor: MPL= dQ / dL ◼ Average Product of labor: APL=Q/L

Short-Run production Q, AP, MP, and shift in Q LK 2345 25527490100 55112162198224 23456 83170247303342 108220325400453 125258390478543 137286425523598

Short-Run Production: Q, AP, MP, and shift in Q L \ K 1 2 3 4 5 1 25 52 74 90 100 2 55 112 162 198 224 3 83 170 247 303 342 4 108 220 325 400 453 5 125 258 390 478 543 6 137 286 425 523 598

K=1 TP=Q MP AP 25 25 25 123456 55 30 22.5 83 28 27.7 10825 27 125 25 13712 22.8

K=1 L TP=Q MP AP 1 25 25 25 2 55 30 22.5 3 83 28 27.7 4 108 25 27 5 125 17 25 6 137 12 22.8