ECON 3411 Lecture Notes - Lecture 29: Production Function, Marginal Product, Isoquant

36 views3 pages

magentasardine691

19 Jan 2018

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

Example: suppose a firm sells its output in a competitive market where its output is sold at per unit. If workers are also hired at a competitive wage of , what is the marginal productivity of the last worker: since, (cid:1839)(cid:1842)(cid:1838) = (cid:1839)(cid:1842)(cid:1838) and = , then, (cid:1839)(cid:1842)(cid:1838) = (cid:1839)(cid:1842)(cid:1838) = 40 units. The marginal productivity of the last unit of labor is 40 units. Alternatively, management should hire labor such that the last unit of labor produces 40 units. Algebraic forms of production functions constants. constants: commonly used algebraic production function forms: Linear: (cid:1843) = ((cid:1837), (cid:1838)) = (cid:1853)(cid:1837) + (cid:1854)(cid:1838), where (cid:1853) and (cid:1854) are constants. Leontief: (cid:1843) = ((cid:1837), (cid:1838)) = min{(cid:1853)(cid:1837), (cid:1854)(cid:1838)}, where (cid:1853) and (cid:1854) are. Cobb-douglas: (cid:1843) = ((cid:1837), (cid:1838)) = (cid:1837)(cid:1853)(cid:1838)(cid:1854), where (cid:1853) and (cid:1854) are: suppose that a fir(cid:373)"s esti(cid:373)ated productio(cid:374) fu(cid:374)ctio(cid:374) is: (cid:1843) = 3(cid:1837)

Related Questions

The short-run production function of Kapital & Co, a competitive firm, is given by

f(L)=6L2/3

where L is the amount of labor it uses.

(For those who would like help with the calculusâif total output is aLb, where a and b are constants, and where L is the amount of some factor of production, then the marginal product of L is given by the formula abLbâ1.)

The cost per unit of labor is w = 6 and the price per unit of output is p = 3.

How many units of labor will the firm hire? .
How much output will it produce? .
If the firm has no other costs, how much will its total profits be? .

jadehare591

1.The Widget Company has the following production function.

Number of Workers	Number of Cases produced
0	0
1	9
2	17
3	24
4	30
5	35

If widgets sell for $6 each and the wage rate is $33, how many workers will the company hire?

2. Zowie! Surfboards have the following production function.

Number of Workers	Number of Surfboards Produced
1	12
2	21
3	29
4	36
5	42

If surfboards sell for $30 and the nominal wage rate is $200, how many workers should the firm employ?

3. The marginal product of labor (measured in units of output) for Expando Corp is given by MPN = A(400 - N) where A measures productivity and N is the number of labor hours used in production. Suppose the price of output is $3 per unit and A = 2.0. What will be the demand for labor if the nominal wage is $18?

4. The marginal product of labor (measured in units of output) for Relient Corp. is given by MPN = A(200 - N) where A measures productivity and N is the number of labor hours used in production. Suppose the price of output is $3 per unit and A = 2.0. What will be the demand for labor if the nominal wage is $30?

5. What is the participation rate if there are 125 million people in the labor force, 100 million people employed, and 25 million not in the labor force?

6. Last year, Linus earned a salary of $25,000 and he spent $24,000, thus saving $1000. At the end of the year, he received a bonus of $1000 and he spent $500 of it, saving the other $500. What was his marginal propensity to consume?

7. Calculate the user cost of capital of a machine that costs $5000 and depreciates at a rate of 25%, when the nominal interest rate is 10% and the expected inflation rate is 5%.

mauveant422

1. In a market economy, the high salaries of some star baseball players such as Adrian Gonzalez, are determined by

		Team owners, based on the total number of star athletes they plan to hire.
	B	advertising companies, based on what they are willing to pay to advertise their products at baseball games.
	C	the interaction of the demand for star athletes and the supply of star athletes.
	D	consumers, based on their willingness to watch baseball games.

2. Demand in factor markets differs from demand in product markets in that

	A	the demand for a factor of production is difficult to determine.
B		the demand for a factor of production is influenced by workers' productivity and by the producers' expected sales revenues, not by tastes and preferences of consumers.
C		demand for a factor of production is based on the tastes and preferences of firms.
D		demand for a factor of production is based on the tastes and preferences of resource owners.

3. The demand for labor is described as a derived demand because

A		it is derived by workers seeking to earn income to fund the consumption of goods and services.
B		it is derived by producers seeking to make profits by starting new businesses.
C		it is derived from the demand for products that use labor in the production process.
D		it is derived from government institutions that rely on labor markets for the purpose of raising tax revenue.

4. Which of the following is not an example of a derived demand?

A		Several of the animated films released between 1999 and 2001 failed to earn a profit, which caused some companies to stop making these films, thereby decreasing the demand for animators.
B		Seth Bullock, a personal injury attorney, complains that he is earning far less now than a few years ago largely because personal injury cases have been undercut by state laws limiting class-action suits and payouts on damages.
C		Millicent Manning, the owner of a furniture store, is concerned that her sales have fallen for the past six months. She attributes this to the downturn in the real estate market.
D		As advancements in medical technology increase the safety and success of laser eye surgery, the demand for opticians has decreased.

5. Marginal revenue product for a perfectly competitive seller is equal to

A		the output price multiplied by the total product of labor.
B		the output price multiplied by the number of workers hired.
C		the change in total revenue that results from hiring another worker.
D		the marginal cost of production.

6. What is the difference between labor's marginal product and marginal revenue product?

A		The marginal product of labor is the increase in output as a result of hiring an additional worker while the marginal revenue product of labor is the increase in profit as a result of hiring an additional worker.
B		The marginal revenue product of labor is the dollar value of hiring an additional worker while the marginal product of labor is the increase in the firm's physical output as a result of hiring an additional worker.
C		The marginal product of labor is the additional labor's contribution to the firm's total output while the marginal revenue product is the additional labor's contribution to the firm's total sales revenue.
D		Labor's marginal product is a measure of labor's productivity while labor's marginal revenue product is a measure of labor's ability to sell the firm's products.

7. What is the difference between a firm's marginal revenue and its marginal revenue product?

A		Marginal revenue is the change in sales revenue from selling one more unit of output while marginal revenue product is the profit earned from hiring one more worker.
B		Marginal revenue is the change in sales revenue from selling one more unit of output while marginal revenue product is the change in total revenue from hiring one more worker.
C		Marginal revenue is the increase in revenue when a firm raises its output price while marginal revenue product is the increase in the marginal product when a firm hires an additional worker.
D		There is no difference between the two terms.

coffeecat509

ECON 3411 Lecture Notes - Lecture 29: Production Function, Marginal Product, Isoquant

Document Summary

Get access

Related Documents

ECON 3411 Lecture Notes - Lecture 27: Sunk Costs, Production Function, Longrun

ECON 3411 Lecture Notes - Lecture 28: Production Function, Marginal Product

ECON 3411 Lecture Notes - Lecture 31: Adapter Molecule Crk, Marginal Product, Marginal Cost

Related Questions