【正文】 iplied by the amount of labor L. Capital costs equal R K, the rental price of capital R times the amount of capital K. Profit = Revenue Labor Costs Capital Costs = PY WL RK Then, to see how profit depends on the factors of production, we use production function Y = F (K, L) to substitute for Y to obtain: Profit = P F (K, L) WL RK This equation shows that profit depends on P, W, R, L, and K. The petitive firm takes the product price and factor prices as given and chooses the amounts of labor and capital that maximize profit. 第三章 國民收入 slide 16 We know that the firm will hire labor and rent capital in the quantities that maximize profit. But what are those maximizing quantities? To answer this, we must consider the quantity of labor and then the quantity of capital. 第三章 國民收入 slide 17 The marginal product of labor (MPL) is the extra amount of output the firm gets from one extra unit of labor, holding the amount of capital fixed and is expressed using the production function: MPL = F(K, L + 1) F(K, L). Most production functions have the property of diminishing marginal product: holding the amount of capital fixed, the marginal product of labor decreases as the amount of labor increases. F (K, L) Y L 1 MPL 1 MPL The MPL is the change in output when the labor input is increased by 1 unit. As the amount of labor increases, the production function bees flatter, indicating diminishing marginal product. 第三章 國民收入 slide 18 When the petitive, profitmaximizing firm is deciding whether to hire an additional unit of labor, it considers how that decision would affect profits. It therefore pares the extra revenue from the increased production that results from the added labor to the extra cost of higher spending on wages. The increase in revenue from an additional unit of labor depends on two variables: the marginal product of labor, and the price of the output. Because an extra unit of labor produces MPL units of output and each unit of output sells for P dollars, the extra revenue is P MPL. The extra cost of hiring one more unit of labor is the wage W. Thus, the change in profit from hiring an additional unit of labor is D Profit = D Revenue D Cost = (P MPL) W 第三章 國民收入 slide 19 Thus, the firm’s demand for labor is determined by P MPL = W, or another way to express this is MPL = W/P, where W/P is the real wage– the payment to labor measured in units of output rather than in dollars. To maximize profit, the firm hires up to the point where the extra revenue equals the real wage. The MPL depends on the amount of labor. The MPL curve slopes downward because the MPL declines as L increases. This schedule is also the firm’s labor demand curve. Units of output Units of labor, L MPL, labor demand Quantity of labor demanded Real wage 第三章 國民收入 slide 20 The firm decides how much capital to rent in the same way it decides how much labor to hire. The marginal product of capital,