Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.
PART 6 The Economics of Labor Markets
Chapter 18 of 36 The Markets for the Factors of Production
Section 8 of 20
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With the goal of maximizing profits this firm, when deciding how many workers to hire to pick apples, considers how much profit each worker would bring in.
Profit is total revenue minus total cost.
The profit gained from an additional worker is the worker's contribution to revenue minus the worker's wage.
To find a worker's contribution to revenue, we multiply the marginal (additional) product of labor by the unit price.
In the Table 1 example, a bushel of apples sells for $10
· if an additional second worker produces 80 bushels of apples, column 3
· the worker produces $800 of revenue, column 4
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For a competitive firm, where price is constant
· the value of marginal product diminishes as number of workers rises
· because the marginal product declines with additional workers
Column 4 value of the marginal product
· is the marginal revenue the firm gets
· from an additional unit of a factor of production, in this example workers
… …
the price is constant
kakaku wa ittei
価格は一定
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