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Chap 012
Chap 012
Chap 012
McGraw-Hill/Irwin
Resource Pricing
12-2
Resource Demand
12-3
Resource Demand
LO1
0
1
2
3
4
5
6
7
(3)
Marginal
Product (MP)
(4)
Product
Price
7
6
5
4
3
2
1
$2
2
2
2
2
2
2
2
0]
7]
13 ]
18 ]
22 ]
25 ]
27
]
28
(5)
Total Revenue,
(2) X (4)
$0
14
26
36
44
50
54
56
]
]
]
]
]
]
]
(6)
Marginal Revenue
Product (MRP)
$14
12
10
8
6
4
2
$18
Purely
Competitive
Firms
Demand for
A Resource
Resource Wage
(Wage Rate)
16
14
12
10
8
6
D=MRP
4
2
0
-2
12-5
0
1
2
3
4
5
6
7
(3)
Marginal
Product (MP)
0]
7]
13 ]
18 ]
22 ]
25 ]
27
]
28
(4)
Product
Price
(5)
Total Revenue,
(2) X (4)
$2.80
2.60
2.40
2.20
2.00
1.87
1.75
1.65
7
6
5
4
3
2
1
$ 0.00
18.20
31.20
39.60
44.00
46.25
47.25
46.20
]
]
]
]
]
]
]
(6)
Marginal Revenue
Product (MRP)
$18.20
13.00
8.40
4.40
2.25
1.00
-1.05
$18
Imperfectly
Competitive
Firms
Demand for
A Resource
Resource Wage
(Wage Rate)
16
14
D=MRP
(Pure Competition)
12
10
8
6
4
2
0
D=MRP
(Imperfect
Competition)
1
-2
12-6
LO2
12-7
LO2
resources
Substitution effect
Output effect
Net effect
Changes in the price of
complementary resources
12-8
Rising employment
Services
Health care
Computers
Declining employment
Labor saving technological change
Textiles
LO2
12-9
Erd =
LO2
12-10
Maximize profit
LO3
12-11
output
Last dollar spent on each resource
yields the same marginal product
Marginal Product
Of Labor (MPL)
Price of Labor (PL)
LO3
Marginal Product
Of Capital (MPC)
12-12
LO3
MRPC
PC
=1
12-13
Income Distribution
LO3
distributed
Market imperfections
12-14
Income Distribution
Numerical Illustration
Data for finding the least-cost and
profit-maximizing combination of
labor and capital
12-15