Production Function
F(X)= (L,K)
Definitions
MP
AP
TP
TP/L
🔺 TP/ 🔺 L
Production
Zones
2
3
1
Both
L Only
Reduce
Dl Competitive
VMP=P*MP
VMP = MRP
MWC=W
Hiring
MRP=MWC
DI Uncompetitive
MRP < MVP
Inelastic
WageBill ⬆
Inelastic W ⬆
Elastic W ⬇
Elasticity Determinants
Q Demand
Labor Cost : Total Cost
Substitutablity
Supply of Inputs
Long Run
Substitution Effect
Output Effect
Determinants
Demand
Productivity
Employers
Resource Price
Complements
Substitutes