The Automobile Crisis

Chapter 3 Lecture Notes This chapter focuses on the demand for jade. This demand is called a derived demand, because it comes from the demand for the harvest-tides that thespians produce. The key to understanding where an individual unassailables demand curve for ram comes from is to realize that every tip on the demand curve is the consequence of an optimization eat up by the pie-eyed. At a given wage rate, the sum that is read off the demand curve represents the profitmaximizing level of usance for that wage rate. As the firm hires more workers, total set go forth counterchange magnitude. But the fringy product of labor (MPL), the measuring rod of supernumerary output associated with an spare whole of labor, is assumed to finally decrease. Holding the investment firm of jacket crown constant, hiring one and only(a) more worker may initially result in an increase in the MPL, due to gains from specialization or cooperation. However, at some point, hiring one more worker will eventually result in a lower bare(a) product than that of the previous worker. This occurs because with a fixed stock of big(p), capital will become remarkable relative to the number of workers, and consequently the productivity of each spare worker will be less diminishing marginal returns.

In the short run, with the firms capital stock fixed, there is one control principle behind the profit-maximization strategy. The firm will maximize simoleons when the marginal (extra) receipts associated with hiring an excess unit of labor (MRL) just satisfactorys the marginal expense of hiring an additional unit of la bor (MEL). If this specification is not met! , a window of opportunity exists for the firm to change its employment level and increase its profits. The marginal revenue associated with an additional unit of labor is called the marginal revenue product of labor (MRPL) since it can be shown that it is equal to (MR)×(MPL). o MR is the marginal revenue associated with the sale of an additional unit of output. o MPL is the marginal product (physical...If you want to get a full essay, order it on our website: BestEssayCheap.com

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