ECN_203_5_Market_Supply(f09)

ECN_203_5_Market_Supply(f09) - Chapter 5 Market Supply...

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Chapter 5 – Market Supply Derive the firm’s marginal cost and supply line. Determine the market supply and its shift variables. Begin to explore competitive markets and the role of individual firms.
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Deriving the Firm’s Supply Line Two concepts : (1) diminishing marginal product (MP) of labor and (2) marginal cost (MC). Diminishing MP -- eventually each successive unit of labor provides less and less output (Q). MC -- the change in total cost of production due to a change in output; MC= TC/ Q = w/ Q.
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Deriving the Firm’s Supply Line Example : At the candy factory, Mr. Goodbar pays each of his workers $100 daily. The following table shows the wage and marginal product (MP) of the additional worker. Complete the table by determining the marginal cost (MC) for the additional units of candy.
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1 $100 200 2 $100 500 3 $100 1000 4 $100 900 5 $100 700 6 $100 600 7 $100 500 8 $100 400
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This note was uploaded on 10/13/2009 for the course ECN 203 taught by Professor Evensky during the Fall '07 term at Syracuse.

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ECN_203_5_Market_Supply(f09) - Chapter 5 Market Supply...

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