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WHAT?: One of three basic questions of allocation (the other two are How? and For Whom?). Answering the 'What?' question of allocation determines the types and quantities of goods and services produced with society's limited resources. Should society produce hammocks or hot fudge sundaes? Computers or Cadillacs? Birdfeed or battleships? The production possibilities analysis sets the stage for answering the 'What?' question.
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Lesson 21: Factor Demand | Unit 3: The Curve
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Page: 14 of 24
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Topic:
The Hiring Decision
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- The number of workers the firm is willing to hire for production depends on the marginal revenue product of the workers.
- In particular, the firm compares the wage or price paid each worker with the marginal revenue product generated by the worker.
- It will seek to employ workers up to the quantity in which marginal revenue product is at least as much as the wage.
- The story seems quite clear: If the wage the firm pays workers is $20 per hour, then it will hire only 6 employees.
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AVERAGE PRODUCT The quantity of total output produced per unit of a variable input, holding all other inputs fixed. Average product, usually abbreviated AP, is found by dividing total product by the quantity of the variable input. Average product, which occasionally goes by the alias average physical product (APP), is one of two measures derived from total product. The other is marginal product.
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BEIGE MUNDORTLE
[What's This?]
Today, you are likely to spend a great deal of time at an auction wanting to buy either a remote controlled ceiling fan or a how-to book on home decorating. Be on the lookout for slow moving vehicles with darkened windows.
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This isn't me! What am I?
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Three-forths of the gold mined each year is used to manufacture jewelry.
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"We succeed in enterprises (that) demand the positive qualities we possess, but we excel in those (that) can also make use of our defects." -- Alexis de Tocqueville, Statesman
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ACBS
Accrediting Commission for Business Schools
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