Econ Lecture Notes

# Econ Lecture Notes - 1 Short Run Production Function 1...

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Cite as: Chia-Hui Chen, course materials for 14.01 Principles of Microeconomics, Fall 2007. MIT OpenCourseWare (http://ocw.mit.edu), Massachusetts Institute of Technology. Downloaded on [DD Month YYYY]. 1 1 Short Run Production Function 14.01 Principles of Microeconomics, Fall 2007 Chia-Hui Chen October 1, 2007 Lecture 11 Production Functions Outline 1. Chap 6: Short Run Production Function 2. Chap 6: Long Run Production Function 3. Chap 6: Returns to Scale 1 Short Run Production Function In the short run, the capital input is ±xed, so we only need to consider the change of labor. Therefore, the production function q = F ( K,L ) has only one variable L (see Figure 1). Average Product of Labor. Output q AP L = = . Labor Input L Slope from the origin to (L,q). Marginal Product of Labor. Output ∂q MP L = = . Labor Input ∂L Additional output produced by an additional unit of labor. Some properties about AP and MP (see Figure 2). When MP = 0 , Output is maximized. When MP > AP, AP is increasing.

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10 9 8 7 0 1 2 3 4 5 6 7 8 9 10 L 0 1 2 3 4 5 6 AP MP Cite as: Chia-Hui Chen, course materials for 14.01 Principles of Microeconomics, Fall 2007. MIT OpenCourseWare (http://ocw.mit.edu),
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Econ Lecture Notes - 1 Short Run Production Function 1...

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