ECN 212 Lecture 12

ECN 212 Lecture 12 - ECN 212 Microeconomic Principles...

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1 ECN 212 Microeconomic Principles L12-Productivity and Costs
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2 Recap: Productivity Example Suppose 2 workers can produce 30 cars, whilst 3 workers can produce 39 cars. What is the MP of the 3 rd worker? Answer: What is the average product at 2 workers? Answer:
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3 Question? Is the average product only increasing if the marginal product is increasing ? Answer:
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Q) If the marginal product of the next unit of labor is 8 widgets and the current average product of labor is 6 widgets if the firm hires the next unit of labor? [A] average product must increase. [B] marginal product must decrease. [C] average product will increase by 8 units. [D] marginal product will decrease by 2 units and average product will increase by 2 units. [E] average product must decrease. 4
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Productivity in the Long Run Remember in the long run _____ inputs are variable. __________ returns to scale Increasing all inputs by X% leads to output increasing by more than X%. E.g. 1 worker and 1 sandwich machine produces 10
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This note was uploaded on 11/13/2011 for the course ECON 212 taught by Professor Johnfiler during the Spring '10 term at ASU.

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ECN 212 Lecture 12 - ECN 212 Microeconomic Principles...

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