【正文】 per Worker 30 8 0 2 3 4 5 6 7 9 10 1 Labor per Month E Marginal Product ?Left of E: MP AP amp。 AP is increasing ?Right of E: MP AP amp。 AP is decreasing ?At E: MP = AP amp。 AP is at its maximum ?At 8 units, MP is zero and output is at max 169。2020 Pearson Education, Inc. Chapter 6 22 Marginal and Average Product ? When marginal product is greater than the average product, the average product is increasing ? When marginal product is less than the average product, the average product is decreasing ? When marginal product is zero, total product (output) is at its maximum ? Marginal product crosses average product at its maximum 169。2020 Pearson Education, Inc. Chapter 6 23 Product Curves ?We can show a geometric relationship between the total product and the average and marginal product curves ?Slope of line from origin to any point on the total product curve is the average product ?At point B, AP = 60/3 = 20 which is the same as the slope of the line from the origin to point B on the total product curve 169。2020 Pearson Education, Inc. Chapter 6 24 Product Curves 10 30 q/L 8 0 2 3 4 5 6 7 9 10 1 Labor q 112 Labor 0 2 3 4 5 6 7 8 9 10 1 C 60 B 20 AP is slope of line from origin to point on TP curve TP MP AP 169。2020 Pearson Education, Inc. Chapter 6 25 Product Curves ?Geometric relationship between total product and marginal product ?The marginal product is the slope of the line tangent to any corresponding point on the total product curve ?For 2 units of labor, MP = 30/2 = 15 which is slope of total product curve at point A 169。2020 Pearson Education, Inc. Chapter 6 26 Product Curves Labor 0 2 3 4 5 6 7 8 9 10 1 q 60 112 30 15 10 30 q 4 8 0 2 3 5 6 7 9 10 1 Labor A MP is slope of line tangent to corresponding point on TP curve TP MP AP 169。2020 Pearson Education, Inc. Chapter 6 27 Production: One Variable Input ?From the previous example, we can see that as we increase labor the additional output produced declines ?Law of Diminishing Marginal Returns: As the use of an input increases with other inputs fixed, the resulting additions to output will eventually decrease 169。2020 Pearson Education, Inc. Chapter 6 28 Law of Diminishing Marginal Returns ?When the use of labor input is small and capital is fixed, output increases considerably since workers can begin to specialize and MP of labor increases ?When the use of labor input is large, some workers bee less efficient and MP of labor decreases 169。2020 Pearson Education, Inc. Chapter 6 29 Law of Diminishing Marginal Returns ?Typically applies only for the short run when one variable input is fixed ?Can be used for longrun decisions to evaluate the tradeoffs of different plant configurations ?Assumes the quality of the variable input is constant 169。2020 Pearson Education, Inc. Chapter 6 30 Law of Diminishing Marginal Returns ?Easily confused with negative returns – decreases in output ?Explains a declining marginal product, not necessarily a negative one ?Additional output can be declining while total output is increasing 169。2020 Pearson Education, Inc. Chapter 6 31 Law of Diminishing Marginal Returns ?Assumes a constant technology ?Changes in technology will cause shifts in the total product curve ?More output can be produced with same inputs ?Labor productivity can increase if there are improvements in technology, even though any given production process exhibits diminishing returns to labor 169。2020 Pearson Education, Inc. Chapter 6 32 The Effect of Technological Improvement Output 50 100 Labor per time period 0 2 3 4 5 6 7 8 9 10 1 A O1 C O3 O2 B Moving from A to B to C, labor productivity is increasing over time 169。2020 Pearson Education, Inc. Chapter 6 33 Malthus and the Food Crisis ?Malthus predicted mass hunger and starvation as diminishing returns limited agricultural output and the population continued to grow ?Why did Malthus’ prediction fail? ?Did not take into account changes in technology ?Although he was right about diminishing marginal returns to labor 169。2020 Pearson Education, Inc. Chapter 6 34 Labor Productivity ?Macroeconomics are particularly concerned with labor productivity ?The average product of labor for an entire industry or the economy as a whole ?Links macro and microeconomics ?Can provide useful parisons across time and across industries Lq t y Pr o d u ct i v i A v e ra g e ?169。2020 Pearson Education, Inc. Chapter 6 35 Labor Productivity ? Link between labor productivity and standard of living ? Consumption can increase only if productivity increases ? Growth of Productivity 1. Growth in stock of capital – total amount of capital available for production 2. Technological change – development of new technologies that allow factors of production to be used more efficiently 169。2020 Pearson Education, Inc. Chapter 6 36 Labor Productivity ?Trends in Productivity ?Labor productivity and productivity growth have differed considerably across countries ?. productivity is growing at a slower rate than other countries ?Productivity growth in developed countries has been decreasing ?Given the central role of productivity in standards of living, understanding differences across countries is important 169。2020 Pearson Education, Inc. Chapter 6 37 Labor Productivity in Developed Countries 169。2020 Pearson Education, Inc. Chapter 6 38 Productivity Growth in US ? Why has productivity growth slowed down? 1. Growth in the stock of capital is the primary determinant of the growth in productivity 2. Rate of capital accumulation (US) was slower than other developed countries because they had to rebuild after WWII 3. Depletion of natural resources 4. Environmental regulati