Marginal product of labor ( MPL )
description
Transcript of Marginal product of labor ( MPL )
![Page 1: Marginal product of labor ( MPL )](https://reader035.fdocuments.net/reader035/viewer/2022062222/56815907550346895dc63a27/html5/thumbnails/1.jpg)
slide 1
Marginal product of labor (Marginal product of labor (MPLMPL))
def:The extra output the firm can produce using an additional unit of labor (holding other inputs fixed):
MPL = F (K, L +1) – F (K, L)
![Page 2: Marginal product of labor ( MPL )](https://reader035.fdocuments.net/reader035/viewer/2022062222/56815907550346895dc63a27/html5/thumbnails/2.jpg)
slide 2
Exercise: Exercise: compute & graph MPLcompute & graph MPL
a. Determine MPL at each value of L
b. Graph the production function
c. Graph the MPL curve with MPL on the vertical axis and L on the horizontal axis
L Y MPL0 0 n.a.1 10 ?2 19 ?3 27 84 34 ?5 40 ?6 45 ?7 49 ?8 52 ?9 54 ?
10 55 ?
![Page 3: Marginal product of labor ( MPL )](https://reader035.fdocuments.net/reader035/viewer/2022062222/56815907550346895dc63a27/html5/thumbnails/3.jpg)
slide 3
answers:answers:
Production function
0
10
20
30
40
50
60
0 1 2 3 4 5 6 7 8 9 10
Labor (L)
Out
put
(Y)
Marginal Product of Labor
0
2
4
6
8
10
12
0 1 2 3 4 5 6 7 8 9 10
Labor (L)M
PL
(u
nit
s o
f o
utp
ut)
![Page 4: Marginal product of labor ( MPL )](https://reader035.fdocuments.net/reader035/viewer/2022062222/56815907550346895dc63a27/html5/thumbnails/4.jpg)
slide 4
Youtput
The MPL and the production The MPL and the production functionfunction
Llabor
F K L( , )
1
MPL
1
MPL
1MPL As more labor
is added, MPL
Slope of the production function equals MPL
![Page 5: Marginal product of labor ( MPL )](https://reader035.fdocuments.net/reader035/viewer/2022062222/56815907550346895dc63a27/html5/thumbnails/5.jpg)
slide 5
Consumption (Consumption (CC))
• durable goods last a long time ex: cars, home appliances
• non-durable goodslast a short time ex: food, clothing
• serviceswork done for consumers ex: dry cleaning, air travel.
def: the value of all goods and services bought by households. Includes:
![Page 6: Marginal product of labor ( MPL )](https://reader035.fdocuments.net/reader035/viewer/2022062222/56815907550346895dc63a27/html5/thumbnails/6.jpg)
slide 6
U.S. Consumption, 2001U.S. Consumption, 2001
$ billions
% of GDP
Consumption $7,064.5 69.2%
Durables 858.3 8.4
Nondurables 2,055.1 20.1
Services 4,151.1 40.7
$ billions
% of GDP
Consumption $7,064.5 69.2%
Durables 858.3 8.4
Nondurables 2,055.1 20.1
Services 4,151.1 40.7
![Page 7: Marginal product of labor ( MPL )](https://reader035.fdocuments.net/reader035/viewer/2022062222/56815907550346895dc63a27/html5/thumbnails/7.jpg)
slide 7
Investment (Investment (II))
def1: spending on [the factor of production] capital.def2: spending on goods bought for future use.Includes: business fixed investment
spending on plant and equipment that firms will use to produce other goods & services
residential fixed investmentspending on housing units by consumers and landlords
inventory investmentthe change in the value of all firms’ inventories
![Page 8: Marginal product of labor ( MPL )](https://reader035.fdocuments.net/reader035/viewer/2022062222/56815907550346895dc63a27/html5/thumbnails/8.jpg)
slide 8
U.S. Investment, 2001U.S. Investment, 2001
$ billions
% of GDP
Investment $1,633.9 16.0%
Business fixed 1,246.0 12.2
Residential fixed 446.3 4.4
Inventory -58.4 -0.6
$ billions
% of GDP
Investment $1,633.9 16.0%
Business fixed 1,246.0 12.2
Residential fixed 446.3 4.4
Inventory -58.4 -0.6
![Page 9: Marginal product of labor ( MPL )](https://reader035.fdocuments.net/reader035/viewer/2022062222/56815907550346895dc63a27/html5/thumbnails/9.jpg)
slide 9
![Page 10: Marginal product of labor ( MPL )](https://reader035.fdocuments.net/reader035/viewer/2022062222/56815907550346895dc63a27/html5/thumbnails/10.jpg)
slide 10
Government spending (Government spending (GG))
G includes all government spending on goods and services.
G excludes transfer payments (e.g. unemployment insurance payments), because they do not represent spending on goods and services.
![Page 11: Marginal product of labor ( MPL )](https://reader035.fdocuments.net/reader035/viewer/2022062222/56815907550346895dc63a27/html5/thumbnails/11.jpg)
slide 11
Government spending,Government spending, 2001 2001
$ billions
% of GDP
Gov spending $1,839.5 18.0%
Federal 615.7 6.0
Non-defense 216.6 2.1
Defense 399.0 3.9
State & local 1,223.8 12.0
$ billions
% of GDP
Gov spending $1,839.5 18.0%
Federal 615.7 6.0
Non-defense 216.6 2.1
Defense 399.0 3.9
State & local 1,223.8 12.0
![Page 12: Marginal product of labor ( MPL )](https://reader035.fdocuments.net/reader035/viewer/2022062222/56815907550346895dc63a27/html5/thumbnails/12.jpg)
slide 12
Net exports (Net exports (NX = EX - IMNX = EX - IM))
def: the value of total exports (EX) minus the value of total imports (IM)
U.S. Net Exports, 1960-2000
-400
-350
-300
-250
-200
-150
-100
-50
0
50
1960 1965 1970 1975 1980 1985 1990 1995 2000
$ b
illio
ns
U.S. Net Exports, 1960-2000
-400
-350
-300
-250
-200
-150
-100
-50
0
50
1960 1965 1970 1975 1980 1985 1990 1995 2000
$ b
illio
ns
![Page 13: Marginal product of labor ( MPL )](https://reader035.fdocuments.net/reader035/viewer/2022062222/56815907550346895dc63a27/html5/thumbnails/13.jpg)
slide 13
CASE STUDYCASE STUDY
The Reagan DeficitsThe Reagan Deficits
Reagan policies during early 1980s: increases in defense
spending: G > 0 big tax cuts: T < 0
According to our model, both policies reduce national saving:
( )S Y C Y T G
G S T C S
![Page 14: Marginal product of labor ( MPL )](https://reader035.fdocuments.net/reader035/viewer/2022062222/56815907550346895dc63a27/html5/thumbnails/14.jpg)
slide 14
1. The Reagan deficits1. The Reagan deficits, cont., cont.
r
S, I
1S
I (r )
r1
I1
r22. …which causes
the real interest rate to rise…
I2
3. …which reduces the level of investment.
1. The increase in the deficit reduces saving…
2S
![Page 15: Marginal product of labor ( MPL )](https://reader035.fdocuments.net/reader035/viewer/2022062222/56815907550346895dc63a27/html5/thumbnails/15.jpg)
slide 15
Are the data consistent with these results?Are the data consistent with these results?
variable 1970s 1980s
T – G –2.2 –3.9
S 19.6 17.4
r 1.1 6.3
I 19.9 19.4
variable 1970s 1980s
T – G –2.2 –3.9
S 19.6 17.4
r 1.1 6.3
I 19.9 19.4
T–G, S, and I are expressed as a percent of GDP
All figures are averages over the decade shown.