# Lecture 16 - Lecture 16 Input Demand I It's not whether...

This preview shows pages 1–3. Sign up to view the full content.

Lecture 16 Input Demand I It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong. George Soros The Economics Outline 1. Marginal Revenue Product 2. Marginal Expense 3. Comparative Statics (single input) The Mathematics Outline 1. Algebra & Calculus Profit Maximization (Yet Again) This time let’s write the profit function as a function of K and L as follows: ) , ( ) , ( L K TC L K TR = π The first-order conditions for profit maximization are: 0 0 = = = = L TC L TR L K TC K TR K We might alternatively write these as: L TC L TR K TC K TR = = In words, these equations say that the marginal revenue associated with hiring one more unit of input must equal the marginal cost of that input. Dr. Steven Waters Econ 380 Page 1 of 5

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
L16: Input Demand I Marginal Revenue Product (MRP) The additional revenue from hiring another unit of input is called the marginal revenue product . MRP
This is the end of the preview. Sign up to access the rest of the document.

## This note was uploaded on 11/30/2011 for the course STAT 380 taught by Professor Stevens during the Spring '11 term at Brigham Young University, Hawaii.

### Page1 / 5

Lecture 16 - Lecture 16 Input Demand I It's not whether...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online