A Production Function and Total Cost Number of Output Marginal Cost of Cost of Total cost of Workers Product of Factory Workers Inputs 0 $30 $30 0123 50 50 30 10 40 90 30 20 50 120 30 30 30 60 4 140 30 150 10 30 50 80 Harcourt, Inc. items and derived items copyright o 2001 by Harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. A Production Function and Total Cost Number of Workers Output Marginal Product of Labor Cost of Factory Cost of Workers Total Cost of Inputs 0 0 $30 $0 $30 1 50 50 30 10 40 2 90 40 30 20 50 3 120 30 30 30 60 4 140 20 30 40 70 5 150 10 30 50 80
The Production Function The production function shows the relationship between quantity of inputs used to make a good and the quantity of output of that good. Harcourt, Inc. items and derived items copyright o 2001 by Harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. The Production Function The production function shows the relationship between quantity of inputs used to make a good and the quantity of output of that good
Marginal product The marginal product of any input in the production process is the increase in the quantity of output obtained from an additional unit of that input. Harcourt, Inc. items and derived items copyright o 2001 by Harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Marginal Product The marginal product of any input in the production process is the increase in the quantity of output obtained from an additional unit of that input
Marginal product Marginal Additional output product Additional input Harcourt, Inc. items and derived items copyright o 2001 by Harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Marginal Product Additional input Additional output = Marginal product
Diminishing Marginal Product o Diminishing marginal product is the property whereby the marginal product of an input declines as the quantity of the input Increases。 Example: As more and more workers are hired at a firm. each additional worker contributes less and less to production because the firm has a limited amount of equipment. Harcourt, Inc. items and derived items copyright o 2001 by Harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Diminishing Marginal Product uDiminishing marginal product is the property whereby the marginal product of an input declines as the quantity of the input increases. uExample: As more and more workers are hired at a firm, each additional worker contributes less and less to production because the firm has a limited amount of equipment