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Name______________________________
Due date
: 09/15/10
Assignment #1
EXPRESSING RELATIONSHIPS —SCHEDULES AND GRAPHS
WITH RESPECT TO THE PRODUCTION AND COST FUNCTION
Part I
In this exercise we are going to look at one of the fundamental relationships in
microeconomics, namely the production function. The concept of this assignment is to
familiarize yourselves with the basic instruments used in analyzing a production function.
As with most economic analyses we begin with a simple model based on a number of
assumptions and then move on to more complex models created by relaxing some of those
assumptions.
In the most simple model we will assume that a single input (factor, resource) is
used to produce a single output (product, good).
Multiple inputs and outputs will generalize the
production model.
One Input model
A production function, or a total product function stipulates that total product is a function of the
amount of the variable input used in combination with fixed inputs:
)

(
F
V
f
TP
=
=
)
(
L
f
Q
=
where:
TP = units of total (physical) product
V = units of the variable input used in combination with in this case labor (
L
)
F = one unit of the fixed input(s).
Definition :
A
production function
is a shortrun schedule, graph, or equation
showing the relationship between units of the variable input(s) and units of
output(s), where units of the variable input(s) and output(s) are both measured per
unit of the fixed inputs, ceteris paribus.
Definitions :
The amount of the output is call
total product
.
Average product
is the amount of output per unit of the variable input
Marginal product
is the change in total product per unit change of the variable
input
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View Full DocumentAverage product is given by:
V
TP
AP
=
or
L
L
f
L
Q
AP
)
(
=
=
and marginal product represents change in total product per unit change in the variable input, so
L
Q
V
TP
MP
δ
=
=
where the Greek symbol δ (delta) means “change in”.
1.
The table on the next page shows a production function for squash expressed as a
schedule.
Use the formula given above to fill in the blanks on this schedule.
Round all
calculations to two significant decimal places
1
.
Note that the marginal product is placed between
two total and average products to emphasize that this is the change between two points.
2.
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 Fall '08
 CAZANOVA

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