Bài giảng MicroEconomics - Chapter 012 The Demand For Resources

The DemandFor ResourcesChapter 12Chapter ObjectivesResource pricingMarginal revenue productivity and firm resource demandFactors that affect resource demandElasticity of resource demandOptimal combination of resources for the competitive firm12-2Resource PricingFirms demand resourcesFocus on laborResource prices are importantMoney-income determinationCost minimizationResource allocationPolicy issues12-3Resource DemandAll markets are competitive (good and resource)Derived demand depends on:Productivity of resource (MP)Price of good it helps produce (P)Marginal revenue product (MRP)Change in TR resulting from unit change in resource (labor)12-4Rule for employing resources: MRP = MRCMarginalRevenueProduct=Change in Total RevenueUnit Change in Resource QuantityMarginalResourceCost=Change in Total (Resource) CostUnit Change in Resource Quantity Marginal Revenue Product (MRP) Marginal Resource Cost (MRC)Resource Demand12-5MRP as Resource Demand(1)Units ofResource(2)Total Product(Output)(3)MarginalProduct (MP)(4)ProductPrice(5)Total Revenue,(2) X (4)(6)Marginal RevenueProduct (MRP)01234567071318222527287654321$22222222$ 014263644505456$1412108642]]]]]]]]]]]]]]12345670-2246810121416$18Resource Wage(Wage Rate)Quantity of Resource DemandedD=MRPPurelyCompetitiveFirm’sDemand forA Resource12-6(1)Units ofResource(2)Total Product(Output)(3)MarginalProduct (MP)(4)ProductPrice(5)Total Revenue,(2) X (4)(6)Marginal RevenueProduct (MRP)01234567071318222527287654321$2.802.602.402.202.001.871.751.65$ 0.0018.2031.2039.6044.0046.2547.2546.20$18.2013.008.404.402.251.00-1.05]]]]]]]]]]]]]]12345670-2246810121416$18Resource Wage(Wage Rate)Quantity of Resource DemandedD=MRP(Pure Competition)ImperfectlyCompetitiveFirm’sDemand forA ResourceD=MRP(ImperfectCompetition)MRP as Resource Demand12-7Resource DemandAmount purchased at different resource prices, all else the sameFor the firm, equal to MRPMarket demand equals sum of firm demandDownsloping because of DMRChanges in price for imperfect competition12-8Determinants of  Resource DemandChanges in product demandChanges in productivityQuantities of other resourcesTechnological advanceQuality of variable resource12-9Changes in the price of substitute resourcesSubstitution effectOutput effectNet effectChanges in the price of complementary resourcesDeterminants of  Resource Demand12-10Employment TrendsRising employmentServicesHealth careComputersDeclining employmentLabor saving technological changeTextiles12-11Elasticity of Resource DemandEase of resource substitutabilityElasticity of product demandRatio of resource cost to total costErd =Percentage Change in Resource QuantityPercentage Change in Resource Price12-12Optimal Combination of ResourcesAll resource inputs are variableChoose optimal combinationMinimize cost of producing a given outputMaximize profit12-13The Least Cost RuleMinimize cost of producing a given outputLast dollar spent on each resource yields the same marginal productMarginal ProductOf Labor (MPL)Price of Labor (PL)Marginal ProductOf Capital (MPC)Price of Capital (PC)=12-14Profit Maximizing RuleMRP of each resource equals its priceMRPLPLMRPCPC== 1MRPLPL=MRPCPC=and12-15Income DistributionPaid according to value of serviceWorkersResource owners InequalityProductive resources unequally distributedMarket Imperfections12-16Case of ATM’sInput substitutionBanks use ATMs instead of peopleLeast-cost combination of resourcesATMs debut about 35 years ago11 billion U.S. transactions per year80,000 tellers eliminated1990-2000Former tellers find new jobsCustomer convenience 12-17Key Termsderived demandmarginal product (MP)marginal revenue product (MRP)marginal resource cost (MRC)MRP=MRC rulesubstitution effectoutput effectelasticity of resource demandleast-cost combination of resourcesprofit-maximizing combination of resourcesmarginal productivity theory of income distribution12-18Next Chapter PreviewWageDetermination12-19