Chapter 9 Production and Cost in the Short Run

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1 Chapter 9 Production and Cost in the Short Run
Managers make production decisions in two different decision-making time frames:short-run production decisions and long-run production decisions . In this chapter the short-run production decisions of the firm will be discussed.

2 ？ Inputs / Factors Outputs products Labor (L) Capital (K) Land (N)
Entrepreneur (E) Inputs / Factors Outputs

3 9.1some basic concepts of production theory
production The creation of goods and services form inputs or resources. production function A schedule (or table or mathematical equation) showing the maximum amount of output that can be produced from any specified set of inputs, given the existing technology.

4 Production function Production function relates the quantity of all inputs to the quantity of outputs assuming all inputs are employed efficiently. Q=F(I1, I2, I3, …In) Where, Q--quantity In --input

5 technical efficiency and economic efficiency
technical efficiency Production of the maximum level of output that can be obtained from a given combination of inputs. economic efficiency Production of a given amount of output at the lowest possible cost.

6 Short-run and long-run
fixed input An input for which the level of usage cannot readily be changed. variable input An input for which the level of usage may be changed quite readily.

7 short run That period of time in which the level of usage of one or more of the inputs is fixed.
long run That period of time (or planning horizon) in which all inputs are variable

8 Fixed or variable proportions
variable proportions production Production in which a given level of output can be produced with more than one combination of inputs. fixed proportions production Production in which one, and only one, ratio or mix of inputs can be used to produce a good.

9 9.2Production in the short-run

10 average product of labor (AP) Total product (output) divided by the number of workers (AP = Q/L).
marginal product of labor (MP) The additional output attributable to using one additional worker with the use of all other inputs fixed (MP = ΔQ/ Δ L)

11 一个企业主在考虑雇用一个工人时在劳动的平均产量和边际产量中他更关心哪一个？

12 答案提要：一个企业主在考虑雇用一个工人时，在劳动的平均产量和边际产量中，他更关心边际产量。企业的合理生产区间为生产的第Ⅱ 阶段，在该区间上，劳动的边际产量大于零。只要企业主多雇一个工人所带来的产量是大于零的，那么总产量是增加的，企业主便愿意雇用他。

13 Short run TP L Q TPL O

14 Special points Q TP-Max D TPL C AP-Max B MP-Max L O

15 So we have Why ? TP decreases beyond D L Q TPL APL MPL C D B

16 1.依据生产三阶段理论，生产应处于（ ）阶段 A. 边际产出递增，总产出递增 B. 边际产出递增，平均产出递增 C.边际产出为正、平均产出递减 D.以上都不是

17 （答案：C） 思路：结合图形分析，在生产的第Ⅰ阶段，平均产量递增到最大值；在第Ⅱ阶段，平均产量递减到边际产量为零的阶段；第Ⅲ阶段，边际产量为负的阶段。理智的生产者应选择在第Ⅱ阶段进行生产，第Ⅱ阶段边际产出递减但为正，平均产出也递减，总产出递增。

18 2.某企业生产发现，现有投入组合下，劳动与资本间边际产量之比大于劳动与资本间价格之比，那么，（ ）。
A.要增加产量，必须增加成本 B.现在投入组合可能是较好的 C.应增大劳动投入比例 D.应增大资本投入比例

19 （答案：C） 思路：当MPL/MPK> w/r时，应用更多的劳动替代资本。随着劳动的增多资本的减少，劳动的边际产量减少，资本的边际产量增大，则MPL/MPK最终在MPL/MPK = w/r处取得均衡。

20 设某厂商的总产量函数为TP=72L+15L2-L3 求1.当L=7时，边际产量为多少？ 2.L地投入量为多大时，MP将开始递减？

21 Law of Diminishing Marginal product
If equal increments of an input are added, and the quantities of other inputs are held constant, the resulting increments of product will decrease beyond some points. And this means the marginal product of input will diminish.

22 law of diminishing marginal product The principle that as the number of units of the variable input increases, other inputs held constant, a point will be reached beyond which the marginal product decreases.

23 应用最恰当的微观经济学理论论述国有企业减员增效的意义。（北大99研）

24 答案提要：在生产中普遍存在一种现象：当连续地等量地把某一种可变生产要素增加到其他一种或几种数量不变的生产要素中去时，当可变要素的投入量达到某一特定值之前，增加一单位该要素的投入量所带来的边际产量是递增的；当可变要素的投入量增加到某一特定值以后所增加的一单位该要素的投入量所带来的边际产量是递减的，这一现象被称为边际报酬递减规律。如果再继续增加可变要素投入直到边际产量为负，则生产效率进一步降低，总产量开始递减。从以上分析我们得知理智的生产者会选择边际产量递减但为正且平均产量递减的生产阶段进行生产，也就是说，在生产规模不变的条件下，可变要素的投入是有限度的，过多的投入将带来生产的非效率。 国有企业过多的员工使得企业的生产脱离了生产的经济区域，造成了企业生产效率的低下，通过减员，减少过多的可变要素投入，使得要素的边际产量增加，要素组合更加合理，从而带来企业生产效率的提高，对于搞活国有企业意义重大。

25 1. A production function measures the relation between?
A. input prices and output prices. B. input prices and the quantity of output. C. the quantity of inputs and the quantity of output. D. the quantity of inputs and input prices. E. none of the above

26 2. A short-run production function assumes that?
A. at least one input is fixed in supply. B. the level of output is fixed. C. all inputs are fixed in supply. D. both a and b E. both b and c

27 3. If average product is decreasing, then marginal product?
A. must be greater than average product. B. must be less than average product. C. must be increasing. D. cannot be decreasing. E. both a and c

28 4. Which of the following statements is TRUE?
A. A firm plans in the short run and operates in the long run. B. In the long run a firm can change all but one input. C. In the long run all inputs are variable. D. In the short run all inputs are fixed.

29 5. Suppose you operate a sandwich shop and currently have two employees. If you hire a third employee, your output of sandwiches per day rises from 75 to 90. If you hire a fourth employee, output rises to 110 per day. A fifth and sixth employee would cause output to rise to 120 and 125 per day, respectively. Choose the correct statement: A. Diminishing returns set have not yet set in because output is still increases. B. Diminishing returns set in with the hiring of the fourth worker. C. Diminishing returns set in with the hiring of the fifth worker. D. Diminishing returns set in with the hiring of the sixth worker.

30 6. The marginal product of labor?
A. is less than the average product of labor when the average product of labor is decreasing. B. measures how output changes as the wage rate changes. C. is negative when adding another unit of labor decreases output. D. both a and c E. both b and c

31 7. Diminishing marginal productivity?
A. occurs when the marginal product curve begins to slope downward. B. occurs eventually because each additional unit of the variable unit has, on average, fewer units of the fixed input with which to work. C. occurs when adding one more unit of the variable input reduces total product. D. both a and b E. both a and c

32 8. If marginal product is increasing, then it must be the case that?
A. average product is increasing. B. average product is less than marginal product. C. average product is greater than marginal product. D. both a and c E. both a and b.

33 9. If a firm is producing a given level of output in a technically-efficient manner, then it must be the case that? A. it is choosing the lowest-cost method of producing that output. B. this output level is the most that can be produced with the given levels of inputs. C. each input is producing its maximum marginal product. D. both a and b E. both a and c

34 10. If a firm is producing a given level of output in an economically-efficient manner, then it must be the case that? A. it is choosing the lowest-cost method of producing that output. B. this output level is the most that can be produced with the given level of inputs. C. each input is producing its maximum marginal product. D. both a and b E. both a and c

35 9.4 The nature of economic costs
In this chapter you will have a brief review of Cost theory which will be found useful for further analysis. But we will go over some concepts.

36 Some useful concepts √ Opportunity cost √ Implicit & Explicit cost
√ Fixed and variable costs

37 Opportunity cost Why there is opportunity cost?
The opportunity cost of producing a product refers to the highest possible revenue from the same inputs if they were used elsewhere. Why there is opportunity cost? Since resources could be used elsewhere, and to choose one opportunity is to sacrifice another.

38 例：上大学的机会成本 个人耗费的经济资源：四年时间、四万元钱 如果用同样这些经济资源去： A：炒股票，收入20万元； B：开餐馆，收入15万元； C：经商，收入13万元。 则上大学的机会成本是20万元。

39 试述机会成本在厂商投资决策中的作用及把握。（复旦大学98研）
判断：某方案的机会成本是指决策者为采取改方案而放弃的任何其他方案的利益。 试述机会成本与会计成本，经济利润与正常利润的区别和联系。（中国海洋大学2002研）

40 Implicit & Explicit cost
Implicit cost refers to the cost of the resources owned and used by the firm’s owner. Explicit cost refers to the ordinary items that accountants include as the firm’s expenses. Firm’s cost should include both Implicit & Explicit cost.

41 例： 你大学毕业后，你可以：到A企业工作，收入3万元；到B企业工作，收入5万元；到C企业工作，收入6万元。 烟台的D企业也需求你，D企业应该给你多少支付你才会去工作（受雇用）呢？显然是6万元。

42 案例分析 张三的收益、成本和利润

43 会计师与经济学家的收益、成本、利润核算表（单位：元）
会计师的算法 经济学家的算法 项目 数量 销售收益 300000 成本 缝纫机批发成本 150000 其他服务 20000 工资 50000 张三本人的工资 45000 固定资产折旧 22000 资产市场价值的减少 10000 银行利息 12000 张三的资金的利息 11500 总成本 254000 293500 会计利润 46000 经济利润 6000

44 ILLUSTRATION 9.2 Suppose Alpha &Beta P330
Implicit Costs and Household Decision Making P333

45 9.5Short run total costs In the short run at least one input is fixed
So we have STC SVC SFC

46 由TP曲线导出SVC曲线 Q Q — L 关系 TPL w · L — Q 关系 L O w · L SVC（w · L）

47 STC(Q) C w·L(Q) 不变成本 可变成本 Q O

48 Classification of short- run cost
TFC, TVC, and TC AFC, AVC, and AC MC

49 total fixed cost (TFC) The total amount paid for fixed inputs
total fixed cost (TFC) The total amount paid for fixed inputs. Total fixed cost does not vary with output. total variable cost (TVC) The amount paid for variable inputs. Total variable cost increases with increases in output

50 total cost (TC) The sum of total fixed cost and total variable cost
total cost (TC) The sum of total fixed cost and total variable cost. Total cost increases with increases in output (TC = TFC + TVC) average fixed cost (AFC) Total fixed cost divided by output (AFC= TFC/Q).

51 Total cost Q C TVC TC TFC O

52 average variable cost (AVC) Total variable cost divided by output (AVC = TVC/Q).
average total cost (ATC) Total cost divided by output or the sum of average fixed cost plus average variable cost (ATC = TC/Q = AFC + AVC). short-run marginal cost (SMC) The change in either total variable cost or total cost per unit change in output (Δ TVC/ Δ Q = Δ TC/ Δ Q).

53 Average fixed cost Q TVC TC TFC O Q C O AFC

54 Average variable cost Q C TVC TC TFC AVC O

55 C TC TVC TFC O Q C AC Q O

56 简述TC曲线上过原点直线切点的意义（复旦大学2001研）

57 C TC TVC TFC O Q MC C Q O

58 什么是平均成本？什么是边际成本？为什么当二者相等时平均成本达到最小值？（武大2002研）

59 请分析为什么平均成本的最低点一定在平均可变成本最低点的右边？

60 A typical set of short-run cost curves is characterized by the following features:
(1) AFC decreases continuously as output increases, (2) AVC is U-shaped, (3) ATC is U-shaped, (4) SMC is U-shaped and crosses both AVC and ATC at their minimum points, and (5) SMC lies below (above) both AVC and ATC over the output range for which these curves fall (rise).

61 判断下列说法是否正确： 平均不变成本决不随产量的增加而提高 边际成本先于平均成本而上升

62 9.6Relations between short-run costs and production

63

64 Q O L MC C AC AVC O Q

65 The link between product curves and cost curves in the short run when one input is variable is reflected in the following relations: SMC = w/MP and AVC = w/AP When MP (AP) is increasing, SMC (AVC) is decreasing. When MP (AP) is decreasing, SMC (AVC) is increasing. When MP equals AP at AP’ maximum value, SMC equals AVC at AVC’minimum value. Similar but not identical relations hold when more than one input is variable.

66 8.已知某厂商的生产函数为Q=40A0.25 B0.75，A、B两种生产要素的价格PA=4，PB=3，求：
当成本TC=80时，为使利润最大化该厂商应投入A和B的数量。

67 当成本一定时，为使利润最大，则应满足MPA/MPB=PA/PB的均衡条件。
对于Q= 40A0.25 B0.75 ， MPA = 10 A-0.75 B0.25 ， MPB =30A0.25 B-0.25 。根据MPA/MPB=PA/PB ，有10 A-0.75 B0.25 / 30A0.25 B-0.25 =4/3，则B=4A。 总成本TC=PA·A+PB·B=4A+3B，将B=4A代入TC，得TC=16A=80，A=5，则B=20。

68 11. A short-run cost function assumes that?
A. the level of output is fixed. B. all inputs are fixed in supply. C. at least one input is fixed in supply. D. both a and c E. none of the above

69 12. Which of the following is an example of an implicit cost?
A. Foregone rent on property owned by the firm. B. The value of time worked by the owner. C. Wages and salaries paid to employees. D. both a and b E. all of the above

70 13. Average fixed cost? A. increases if marginal cost is increasing. B. increases as output increases. C. decreases as output increases. D. increases if marginal cost is greater than average fixed cost.

71 14. Marginal cost? A. is less than average cost when average cost is decreasing. B. measures how total cost changes when one more unit of output is produced. C. measures how total cost changes when input prices change. D. both a and b E. both b and c

72 15. The next 6 questions refer to the following:

73 At what output does the firm reach minimum average variable cost?
A. 80 B C D. 6,000 E. 8,000

74 16. What is AVC at its minimum?
A. $15 B. $25 C. $40 D. $80 E. $100

75 17. When the firm uses 60 units of labor, how much output does it produce?
A. 60 units B. 360 units C. 3,600 units D. 5,400 units E. none of the above

76 18. When the firm uses 60 units of labor, what is AVC at this level of output?
A. $ B. $ C. $60 D. $120 E. $2,000

77 19. When the firm uses 60 units of labor, what is marginal cost at this level of output?
A. $ B. $ C. $90 D. $180 E. $2000

78 20. When the firm uses 60 units of labor, what is average total cost at this output?
A. $ B. $60 C. $ D. $120 E. none of the above