Chapter 6Slide 2Slide 3Slide 4Slide 5Slide 6Slide 7Slide 8Slide 9Slide 10Slide 11Slide 12Slide 13Slide 14Slide 15Jeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedFirms and ProductionChapter 6Jeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedTable 6.01 Total Production, Marginal Product, and Average Product of Labor with Fixed CapitalJeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights Reserved Output, q,Units per dayBAC11640L, Workers per dayMarginal product, MPLAverage product, APLAPL, MPL1109056(a)bac11640L, Workers per day2015(b)Figure 6.01 ProductionRelationships with Variable LaborJeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedTable 6.02 Output Produced with Two Variable InputsJeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedFigure 6.02 Family of IsoquantsK, Units ofcapital per dayebadfc63210L, Workers per day6321q = 14q = 24q = 35Jeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedFigure 6.03a Substitutability of Inputsy, Idaho potatoesper day(a)x, Maine potatoes per dayq = 3q = 2q = 1Jeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedFigure 6.03b Substitutability of InputsBoxesper day(b)Cereal per dayq = 3q = 2q = 145° lineJeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedFigure 6.03c Substitutability of Inputsq = 1K, Capital perunit of time(c)L, Labor per unit of timeJeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedApplication A Semiconductor Integrated Circuit Isoquant K, Units ofcapital per dayAlignerStepperWafer-handling stepper200 ten-layer chips per day isoquant81 3L, Workers per day0Jeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedFigure 6.04 How the Marginal Rate of Technical Substitution Varies Along an IsoquantK, Units ofcapital per yearebK = –18–7–4–2 L = 1dc631114 520 L, Workers per day392114108q = 10aJeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedApplication (a) Returns to Scale in Manufacturing K, Units ofcapital per yearq = 100q = 200q = 177500400300200100 450350250150500L, Units of labor per year600500400300200100(a) Thread Mill: Decreasing Returns to ScaleJeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedApplication (b) Returns to Scale in Manufacturing K, Units ofcapital per yearq = 100q = 200500400300200100 450350250150500L, Units of labor per year600500400300200100(b) Shoe Factory: Constant Returns to ScaleJeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedApplication (c) Returns to Scale in Manufacturing Kcapital per yearq = 100q = 200q = 251500400300200100 450350250150500L, Units of labor per year600500400300200100(c) Concrete Blocks and Bricks: Increasing Returns to Scale, Units ofJeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedFigure 6.05 Varying Scale EconomiesK, Units ofcapital per year41 2abca b: Increasing returns to scaleb c: Constant returns to scalec d: Decreasing returns to scale8 L, Work hours per year42108q = 8q = 6q = 3q = 1dJeffrey M. Perloff, Microeconomics, © 2001 Addison Wesley Longman, Inc., All Rights ReservedTable 6.03 Returns to Scale in
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