Homework 3 a Use a table to show tp mp ap of labor when K=2 a Use tables to show TP, MP, AP of capital when L=1, L=2, respectively Draw the tp curves of labor when Ke1.K-2 respectively Draw the TP curves of capital when L=1, L=2 respectively Bonus: what can you conclude from the tables and graphs
Homework 3 ◼ Use a table to show TP, MP, AP of labor when K=2 ◼ Use tables to show TP, MP, AP of capital when L=1, L=2, respectively ◼ Draw the TP curves of labor when K=1, K=2, respectively ◼ Draw the TP curves of capital when L=1, L=2, respectively ◼ Bonus: what can you conclude from the tables and graphs?
Production: one input TP=Q=f(L, K, N,E When kn.e fixed SR TP(L=fL AP(L=TP(L/L MP( L=dTP(L/dL ■ MP is the slope of TP tP maximized when mP= 0
Production: one input ◼ TP = Q = f(L,K,N,E) ◼ When K,N,E fixed: SR ◼ TP(L) = f (L) ◼ AP(L) = TP(L) / L ◼ MP(L) = dTP(L) /dL ◼ MP is the slope of TP ◼ TP maximized when MP = 0
Short-Run Production(one input Summary L=O leads to Q=O when MP is increasing, Q is increasing at an increasing rate when MP is decreasing, Q may sti increase but at a decreasing rate When MP=0, Q stop increasing and start decreasing(Q is maximized) AP reaches its maximum when aPmP
Short-Run Production (one input) Summary ◼ L=0 leads to Q=0 ◼ when MP is increasing, Q is increasing at an increasing rate ◼ when MP is decreasing, Q may still increase but at a decreasing rate ◼ When MP=0, Q stop increasing and start decreasing (Q is maximized). ◼ AP reaches its maximum when AP=MP
Q MP>AP MP<AP MP<O AP个 APV MP=O TP TP Max MP=AP ⅡⅢ AP Max E AP B
Q L 0 TP AP MP E A B Ⅰ Ⅱ Ⅲ F MP>AP AP MP<AP AP MP<0 TP MP=AP AP Max MP=0 TP Max
Questions to Consider Why will mP decline before ap declines? a Why will aP decline before tP declines? a Why will MP intersect AP at APs maximum
Questions to Consider ◼ Why will MP decline before AP declines? ◼ Why will AP decline before TP declines? ◼ Why will MP intersect AP at AP’s maximum?