ECON 103 Chapter Notes - Chapter 8: Marginal Product, Production Function, Demand Curve
12 May 2016
School
Department
Course
Professor
Document Summary
However, unlike the last chapter where a given individual was always equally productive, now each person"s productivity will change depending on how much they produce. Once again, we will show that under this set of assumptions, the supply curve is again upward sloping. A production functions tells us the maximum amount of an output for a given amount of inputs: 8. 1 the production function (page 187) Constant returns to scale: a doubling of all inputs leads to a doubling of output. The problem with directly testing for constant returns to scale is we can never be sure we"ve literally doubled everything exactly: inputs are hard to measure, and we"re never sure two inputs are always identical. The marginal product is defined as the change in output when a single input changes. When you calculate a marginal product, only one input is changing; the others are held constant.
