05-6 0 Short Run and Long Run 。Short-run: -Period of time in which quantities of one or more production factors cannot be changed. These inputs are called fixed inputs. ·Long-run Amount of time needed to make all production inputs variable. Economics ECONOMICS MANAGEMENT SCHOOL,TONGJI UNIVERSITY
Economics ECONOMICS & MANAGEMENT SCHOOL, TONGJI UNIVERSITY 05-6 Short Run and Long Run • Short-run: – Period of time in which quantities of one or more production factors cannot be changed. – These inputs are called fixed inputs. • Long-run – Amount of time needed to make all production inputs variable
1907 05-7 4.4 Production Function in Short Run Economics ECONOMICS MANAGEMENT SCHOOL.TONGJI UNIVERSITY
Economics ECONOMICS & MANAGEMENT SCHOOL, TONGJI UNIVERSITY 05-7 4.4 Production Function in Short Run
05-8 0 Production with One Variable Input (Labor) Amount Amount Total Average Marginal of Labor (L) of Capital(K)Output(Q) Product I Product 0 10 0 1 10 10 10 10 2 10 30 15 20 3 10 60 20 30 4 10 80 20 20 5 10 95 19 15 6 10 108 18 13 7 10 112 16 8 1 112 14 0 9 10 108 12 -4 10 0 100 10 -8 Economics ECONOMICS MANAGEMENT SCHOOL,TONGJI UNIVERSITY
Economics ECONOMICS & MANAGEMENT SCHOOL, TONGJI UNIVERSITY 05-8 Amount Amount Total Average Marginal of Labor (L) of Capital (K) Output (Q) Product Product Production with One Variable Input (Labor) 0 10 0 --- --- 1 10 10 10 10 2 10 30 15 20 3 10 60 20 30 4 10 80 20 20 5 10 95 19 15 6 10 108 18 13 7 10 112 16 4 8 10 112 14 0 9 10 108 12 -4 10 10 100 10 -8
05-9 190 Production with One Variable Input (Labor) Output per Month 112 Total Product 60 A:slope of tangent MP (20) 1 B:slope of OB=AP(20) C:slope of OC=MP AP 0 1 23 4 56789 10 Labor per Month Economics ECONOMICS MANAGEMENT SCHOOL.TONGJI UNIVERSITY
Economics ECONOMICS & MANAGEMENT SCHOOL, TONGJI UNIVERSITY 05-9 Total Product Labor per Month Output per Month 60 112 0 2 3 4 5 6 7 8 9 10 1 A B C D Production with One Variable Input (Labor) A: slope of tangent = MP (20) B: slope of OB = AP (20) C: slope of OC= MP & AP
05-10 0 Production with One Variable Input (Labor) Observations: Output Left of E:MP>APAP is increasing per Right of E:MP AP AP is decreasing Month E:MP APAP is at its maximum 30 Marginal Product 20 Average Product 10 0 1 2 3 4 5 6 7 8"9 10Labor per Month Economics ECONOMICS MANAGEMENT SCHOOL,TONGJI UNIVERSITY
Economics ECONOMICS & MANAGEMENT SCHOOL, TONGJI UNIVERSITY 05-10 Average Product Production with One Variable Input (Labor) 8 10 20 Output per Month 0 2 3 4 5 6 7 9 10 1 Labor per Month 30 E Marginal Product Observations: Left of E: MP > AP & AP is increasing Right of E: MP < AP & AP is decreasing E: MP = AP & AP is at its maximum