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