BU111 Chapter Notes - Chapter 18: Marginal Product, Demand Curve, Production Function
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BU111 Full Course Notes
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Chapter 18 the markets for the factors of production. Factors of production the inputs used to produce goods and services (land, labor, capital) Profit maximizing firm > does not care about number of workers it has, only cares about profit = Tr from the sale of apples total cost of producing them. Production function relationship between the quantity of inputs used to make a good and quantity of output of that good. Marginal product of labor the increase of output from another input. Diminishing marginal product the property whereby the marginal product of an input declines as quantity of the input increases. Value of the marginal product the marginal product of an input times the price of the output. A competitive, profit-maximizing firm hires workers up to the point where the value of the mp of labor = wage. The value-of-marginal-product curve is the labour demand curve for a competitive, profit- maximizing firm.
