Bài giảng MicroEconomics - Chapter 12 The Demand for Resources

The Demand for ResourcesMcGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.Resource PricingFirms demand resourcesFocus on laborResource prices are importantMoney-income determinationCost minimizationResource allocationPolicy issuesLO112-2Resource DemandAll markets are competitive (good and resource)Derived demand depends on:Productivity of resource (MP)Price of the good it helps produce (P)Marginal revenue product (MRP)Change in TR resulting from unit change in resource (labor)LO112-3Rule 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)LO1Resource Demand12-4Resource Wage(Wage Rate)Quantity of Resource DemandedMRP 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$18D=MRPPurelyCompetitiveFirm’sDemand forA ResourceLO112-501234567071318222527287654321$2.802.602.402.202.001.871.751.65$ 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 Demand(1)Units ofResource(2)Total Product(Output)(3)MarginalProduct (MP)(4)ProductPrice(5)Total Revenue,(2) X (4)(6)Marginal RevenueProduct (MRP)LO112-6Determinants of Resource DemandChanges in product demandChanges in productivityQuantities of other resourcesTechnological advanceQuality of the variable resourceLO212-7Determinants of Resource DemandChanges in the price of substitute resourcesSubstitution effectOutput effectNet effectChanges in the price of complementary resourcesLO212-8Occupational Employment TrendsRising employmentServicesHealth careComputersDeclining employmentLabor saving technological changeTextilesLO212-9Elasticity of Resource DemandEase of resource substitutabilityElasticity of product demandRatio of resource cost to total costErd =Percentage Change in Resource QuantityPercentage Change in Resource PriceLO212-10Optimal Combination of ResourcesAll resource inputs are variableChoose the optimal combinationMinimize cost of producing a given outputMaximize profitLO312-11The 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)=LO312-12Profit Maximizing RuleMRP of each resource equals its priceMRPLPLMRPCPC== 1MRPLPL=MRPCPC=andLO312-13Income DistributionPaid according to value of serviceWorkersResource owners InequalityProductive resources unequally distributedMarket imperfectionsLO312-14Income DistributionNumerical IllustrationData for finding the least-cost and profit-maximizing combination of labor and capital12-15