微观经济学及财务知识分析规范.pptx

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1、Chapter 6Production1Chapter 1Topics to be DiscussednThe Technology of ProductionnIsoquantsnProduction with One Variable Input (Labor)nProduction with Two Variable InputsnReturns to Scale2Chapter 1IntroductionnOur focus is the supply side.nThe theory of the firm will address:lHow a firm makes cost-mi

2、nimizing production decisionslHow cost varies with outputlCharacteristics of market supplylIssues of business regulation3Chapter 1The Technology of ProductionnThe Production ProcesslCombining inputs or factors of production to achieve an outputnCategories of Inputs (factors of production)lLaborlMate

3、rialslCapital4Chapter 1The Technology of ProductionnProduction Function:lIndicates the highest output that a firm can produce for every specified combination of inputs given the state of technology.lShows what is technically feasible when the firm operates efficiently.5Chapter 1The Technology of Pro

4、ductionnThe production function for two inputs:Q = F(K,L) Q = Output, K = Capital, L = LabornFor a given technology6Chapter 1IsoquantsnAssumptionslFood producer has two inputsuLabor (L) & Capital (K)7Chapter 1IsoquantsnObservations:1) For any level of K, output increases with more L.2) For any level

5、 of L, output increases with more K.3) Various combinations of inputs produce the same output.8Chapter 1IsoquantsnIsoquantslCurves showing all possible combinations of inputs that yield the same output9Chapter 1Production Function for Food1204055657524060758590355759010010546585100110115575901051151

6、20Capital Input 12345Labor Input10Chapter 1Production with Two Variable Inputs (L,K)Labor per year1234123455Q1 = 55The isoquants are derivedfrom the productionfunction for output ofof 55, 75, and 90.ADBQ2 = 75Q3 = 90CECapitalper yearThe Isoquant Map11Chapter 1IsoquantsnThe isoquants emphasize how di

7、fferent input combinations can be used to produce the same output.nThis information allows the producer to respond efficiently to changes in the markets for inputs.Input Flexibility12Chapter 1IsoquantsnShort-run:lPeriod of time in which quantities of one or more production factors cannot be changed.

8、lThese inputs are called fixed inputs.The Short Run versus the Long Run13Chapter 1IsoquantsnLong-runlAmount of time needed to make all production inputs variable.The Short Run versus the Long Run14Chapter 1AmountAmountTotalAverage Marginalof Labor (L)of Capital (K) Output (Q)ProductProductProduction

9、 withOne Variable Input (Labor)0100-110101010210301520310602030410802020510951915610108181371011216481011214091010812-4101010010-815Chapter 1nObservations:1) With additional workers, output (Q) increases, reaches a maximum, and then decreases.Production withOne Variable Input (Labor)16Chapter 1nObse

10、rvations:2) The average product of labor (AP), or output per worker, increases and then decreases.LQInput LaborOutput APProduction withOne Variable Input (Labor)17Chapter 1nObservations:3) The marginal product of labor (MP), or output of the additional worker, increases rapidly initially and then de

11、creases and becomes negative.LQInput LaborOutput MPLProduction withOne Variable Input (Labor)18Chapter 1Total ProductA: slope of tangent = MP (20)B: slope of OB = AP (20)C: slope of OC= MP & APLabor per MonthOutputper Month60112023456789101ABCDProduction withOne Variable Input (Labor)19Chapter 1Aver

12、age ProductProduction withOne Variable Input (Labor)81020Outputper Month02345679101Labor per Month30EMarginal ProductObservations:Left of E: MP AP & AP is increasingRight of E: MP AP, AP is increasinglWhen MP AP, AP is decreasinglWhen MP = AP, AP is at its maximumProduction withOne Variable Input (L

13、abor)21Chapter 1Production withOne Variable Input (Labor)Laborper MonthOutputper Month6011202 3 4 5 6 7 8 9 101ABCD81020E02 3 4 5 6 79 10130Outputper MonthLaborper MonthAP = slope of line from origin to a point on TP, lines b, & c.MP = slope of a tangent to any point on the TP line, lines a & c.22Ch

14、apter 1nAs the use of an input increases in equal increments, a point will be reached at which the resulting additions to output decreases (i.e. MP declines).Production withOne Variable Input (Labor)The Law of Diminishing Marginal Returns23Chapter 1nWhen the labor input is small, MP increases due to

15、 specialization.nWhen the labor input is large, MP decreases due to inefficiencies.The Law of Diminishing Marginal ReturnsProduction withOne Variable Input (Labor)24Chapter 1nCan be used for long-run decisions to evaluate the trade-offs of different plant configurationsnAssumes the quality of the va

16、riable input is constantThe Law of Diminishing Marginal ReturnsProduction withOne Variable Input (Labor)25Chapter 1nExplains a declining MP, not necessarily a negative onenAssumes a constant technologyThe Law of Diminishing Marginal ReturnsProduction withOne Variable Input (Labor)26Chapter 1The Effe

17、ct ofTechnological ImprovementLabor pertime periodOutputper timeperiod50100023456789101AO1CO3O2BLabor productivitycan increase if there are improvements intechnology, even thoughany given productionprocess exhibitsdiminishing returns tolabor.27Chapter 1nMalthus predicted mass hunger and starvation a

18、s diminishing returns limited agricultural output and the population continued to grow.nWhy did Malthus prediction fail?Malthus and the Food Crisis28Chapter 1Index of World FoodConsumption Per Capita1948-1952100196011519701231980128199013719951351998140Year Index29Chapter 1Malthus and the Food Crisi

19、snThe data show that production increases have exceeded population growth.nMalthus did not take into consideration the potential impact of technology which has allowed the supply of food to grow faster than demand.30Chapter 1Malthus and the Food CrisisnTechnology has created surpluses and driven the

20、 price down.nQuestionlIf food surpluses exist, why is there hunger?31Chapter 1Malthus and the Food CrisisnAnswerlThe cost of distributing food from productive regions to unproductive regions and the low income levels of the non-productive regions.32Chapter 1nLabor Productivity Input Labor TotalOutpu

21、t Total ty Productivi AverageProduction withOne Variable Input (Labor)33Chapter 1nLabor Productivity and the Standard of LivinglConsumption can increase only if productivity increases.lDeterminants of ProductivityuStock of capitaluTechnological changeProduction withOne Variable Input (Labor)34Chapte

22、r 1Labor Productivity inDeveloped Countries1960-19734.754.048.302.892.361974-19862.101.852.501.690.711987-19971.482.001.941.021.09UnitedUnitedFranceGermanyJapanKingdomStatesAnnual Rate of Growth of Labor Productivity (%)$54,507$55,644$46,048$42,630$60,915Output per Employed Person (1997)35Chapter 1n

23、Trends in Productivity1) U.S. productivity is growing at a slower rate than other countries.2) Productivity growth in developed countries has been decreasing.Production withOne Variable Input (Labor)36Chapter 1nExplanations for Productivity Growth Slowdown1) Growth in the stock of capital is the pri

24、mary determinant of the growth in productivity.Production withOne Variable Input (Labor)37Chapter 1nExplanations for Productivity Growth Slowdown2) Rate of capital accumulation in the U.S. was slower than other developed countries because the others were rebuilding after WWII.Production withOne Vari

25、able Input (Labor)38Chapter 1nExplanations for Productivity Growth Slowdown3) Depletion of natural resources4) Environment regulationsProduction withOne Variable Input (Labor)39Chapter 1nObservationlU.S. productivity has increased in recent yearsnWhat Do You Think?lIs it a short-term aberration or a

26、 new long-run trend?Production withOne Variable Input (Labor)40Chapter 1Production withTwo Variable InputsnThere is a relationship between production and productivity.nLong-run production K& L are variable.nIsoquants analyze and compare the different combinations of K & L and output41Chapter 1The Sh

27、ape of IsoquantsLabor per year1234123455In the long run both labor and capital arevariable and bothexperience diminishingreturns.Q1 = 55Q2 = 75Q3 = 90Capitalper yearADBCE42Chapter 1nReading the Isoquant Model1) Assume capital is 3 and labor increases from 0 to 1 to 2 to 3. uNotice output increases a

28、t a decreasing rate (55, 20, 15) illustrating diminishing returns from labor in the short-run and long-run.Production withTwo Variable InputsDiminishing Marginal Rate of Substitution43Chapter 1nReading the Isoquant Model2) Assume labor is 3 and capital increases from 0 to 1 to 2 to 3.uOutput also in

29、creases at a decreasing rate (55, 20, 15) due to diminishing returns from capital.Diminishing Marginal Rate of SubstitutionProduction withTwo Variable Inputs44Chapter 1nSubstituting Among InputslManagers want to determine what combination if inputs to use. lThey must deal with the trade-off between

30、inputs.Production withTwo Variable Inputs45Chapter 1nSubstituting Among InputslThe slope of each isoquant gives the trade-off between two inputs while keeping output constant.Production withTwo Variable Inputs46Chapter 1nSubstituting Among InputslThe marginal rate of technical substitution equals:in

31、putlabor in angecapital/Chin Change - MRTS) of level fixed a(for QLK MRTSProduction withTwo Variable Inputs47Chapter 1Marginal Rate ofTechnical SubstitutionLabor per month1234123455Capital per yearIsoquants are downwardsloping and convexlike indifferencecurves.1111212/31/3Q1 =55Q2 =75Q3 =9048Chapter

32、 1nObservations:1) Increasing labor in one unit increments from 1 to 5 results in a decreasing MRTS from 1 to 1/2.2) Diminishing MRTS occurs because of diminishing returns and implies isoquants are convex.Production withTwo Variable Inputs49Chapter 1nObservations:3) MRTS and Marginal ProductivityuTh

33、e change in output from a change in labor equals:L)(MPLProduction withTwo Variable Inputs50Chapter 1nObservations:3) MRTS and Marginal ProductivityuThe change in output from a change in capital equals:Production withTwo Variable InputsK)(MPK51Chapter 1nObservations:3) MRTS and Marginal Productivityu

34、If output is constant and labor is increased, then:0 K)(MP L)(MPKL MRTS L)K/( - )(MP(MPKLProduction withTwo Variable Inputs52Chapter 1Isoquants When Inputs are Perfectly SubstitutableLaborper monthCapitalper monthQ1Q2Q3ABC53Chapter 1nObservations when inputs are perfectly substitutable:1) The MRTS i

35、s constant at all points on the isoquant.Production withTwo Variable InputsPerfect Substitutes54Chapter 1nObservations when inputs are perfectly substitutable:2) For a given output, any combination of inputs can be chosen (A, B, or C) to generate the same level of output (e.g. toll booths & musical

36、instruments)Production withTwo Variable InputsPerfect Substitutes55Chapter 1Fixed-ProportionsProduction FunctionLabor per monthCapitalpermonthL1K1Q1Q2Q3ABC56Chapter 1nObservations when inputs must be in a fixed-proportion:1) No substitution is possible.Each output requires a specific amount of each

37、input (e.g. labor and jackhammers).Fixed-Proportions Production FunctionProduction withTwo Variable Inputs57Chapter 1nObservations when inputs must be in a fixed-proportion:2) To increase output requires more labor and capital (i.e. moving from A to B to C which is technically efficient).Fixed-Propo

38、rtions Production FunctionProduction withTwo Variable Inputs58Chapter 1A Production Function for WheatnFarmers must choose between a capital intensive or labor intensive technique of production.59Chapter 1Isoquant Describing theProduction of WheatLabor(hours per year)Capital(machinehour peryear)2505

39、007601000408012010090Output = 13,800 bushels per yearAB10- K 260 L Point A is more capital-intensive, andB is more labor-intensive.60Chapter 1nObservations:1) Operating at A:u L = 500 hours and K = 100 machine hours.Isoquant Describing theProduction of Wheat61Chapter 1nObservations:2) Operating at B

40、uIncrease L to 760 and decrease K to 90 the MRTS 1:04. 0)260/10(LK- MRTSIsoquant Describing theProduction of Wheat62Chapter 1nObservations:3) MRTS 1, therefore the cost of labor must be less than capital in order for the farmer substitute labor for capital.4) If labor is expensive, the farmer would

41、use more capital (e.g. U.S.).Isoquant Describing theProduction of Wheat63Chapter 1nObservations:5) If labor is inexpensive, the farmer would use more labor (e.g. India).Isoquant Describing theProduction of Wheat64Chapter 1Returns to ScalenMeasuring the relationship between the scale (size) of a firm

42、 and output1) Increasing returns to scale: output more than doubles when all inputs are doubleduLarger output associated with lower cost (autos)uOne firm is more efficient than many (utilities)uThe isoquants get closer together65Chapter 1Returns to ScaleLabor (hours)Capital(machinehours)102030Increa

43、sing Returns:The isoquants move closer together510240A66Chapter 1Returns to ScalenMeasuring the relationship between the scale (size) of a firm and output2) Constant returns to scale: output doubles when all inputs are doubleduSize does not affect productivityuMay have a large number of producersuIs

44、oquants are equidistant apart67Chapter 1Returns to ScaleLabor (hours)Capital(machinehours)Constant Returns:Isoquants are equally spaced 10203015510240A668Chapter 1Returns to ScalenMeasuring the relationship between the scale (size) of a firm and output3) Decreasing returns to scale: output less than

45、 doubles when all inputs are doubleduDecreasing efficiency with large sizeuReduction of entrepreneurial abilitiesuIsoquants become farther apart69Chapter 1Returns to ScaleLabor (hours)Capital(machinehours)Decreasing Returns:Isoquants get further apart102030510240A70Chapter 1Returns to Scalein the Ca

46、rpet IndustrynThe carpet industry has grown from a small industry to a large industry with some very large firms.71Chapter 1Returns to Scalein the Carpet IndustrynQuestionlCan the growth be explained by the presence of economies to scale?72Chapter 1Carpet Shipments, 1996(Millions of Dollars per Year

47、)The U.S. Carpet Industry1. Shaw Industries $3,2026. World Carpets$4752. Mohawk Industries1,795 7. Burlington Industries 4503. Beaulieu of America1,006 8. Collins & Aikman4184. Interface Flooring8209. Masland Industries3805. Queen Carpet77510. Dixied Yarns28073Chapter 1Returns to Scalein the Carpet

48、IndustrynAre there economies of scale?lCosts (percent of cost)uCapital - 77%uLabor - 23%74Chapter 1Returns to Scalein the Carpet IndustrynLarge ManufacturerslIncreased in machinery & laborlDoubling inputs has more than doubled outputlEconomies of scale exist for large producers75Chapter 1Returns to

49、Scalein the Carpet IndustrynSmall ManufacturerslSmall increases in scale have little or no impact on outputlProportional increases in inputs increase output proportionallylConstant returns to scale for small producers76Chapter 1SummarynA production function describes the maximum output a firm can pr

50、oduce for each specified combination of inputs.nAn isoquant is a curve that shows all combinations of inputs that yield a given level of output.77Chapter 1SummarynAverage product of labor measures the productivity of the average worker, whereas marginal product of labor measures the productivity of