Profit Maximization and Labor Demand

Mar 30, 2014

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Marginal Revenue Product. How do we measure the marginal income from an additional input?The value of a worker can be divided into two parts:Marginal Product of Labor: the productivity of the last unit of labor hired (i.e. the productivity of a worker).Marginal Revenue of Output: the revenue gene

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Profit Maximization and Labor Demand

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Profit Maximization and Labor Demand

Profit Maximization and Labor Demand Fundamental assumption: Firms seek to maximize profits. Firm’s maximize profits be equating marginal revenue and marginal cost. With respect to inputs, firms will add inputs as long as the income generated by the input exceeds the expense of the input.

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Profit Maximization

Profit Maximization. Chapter 9-1. Profit Maximization. The objective of a for-profit firm is to maximize profit. Profit is total revenue less the costs of the resources (land, labor, capital) used. Total revenue is the price of goods and services multiplied by the quantity sold, PQ.

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Sports and Profit Maximization

Sports and Profit Maximization. Here we explore the world of sports and many aspects of what profit maximization means in this world. . Leagues. Leagues are by nature cooperative bodies in that -teams are rivals that succeed at the expense of each other,

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Profit maximization. Profit maximization. Economic profit = total revenue - all economic costs Economic costs include accounting cost ( explicit costs ) and opportunity costs (implicit costs ). Economic vs. accounting profit. economic profit = total revenue - all economic costs

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Profit Maximization

Profit Maximization. Perfect Competition and Firms with Market Power. General Condition. Profit: π = R(Q) – C(Q) At a maximum: ∆ π /∆Q = (∆R/∆Q) – (∆C/∆Q) = 0 ∆R/∆Q = Marginal Revenue = MR ∆C/∆Q = Marginal Cost = MC Implies MR – MC = 0 or MR = MC To maximize profit

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Profit Maximization

Profit Maximization. Profit Maximizing Assumptions. Firm: Technical unit that produces goods or services. Entrepreneur (owner and manager) Gains the firm’s profits and suffers losses and has the goal of maximizing profit.

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Chapter 22. Profit Maximization. The Profit Motive. The basic incentive for producing goods & services is the expectation of profit. Profit is the difference between Total Revenue & Total Cost. Chapter 22. 2. Motives To Produce. A.K.A. - Why run your own business? Expected Profit

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Profit Maximization

Profit Maximization. Beattie, Taylor, and Watts Sections: 3.1b-c, 3.2c, 4.2-4.3, 5.2a-d. Agenda. Generalized Profit Maximization Profit Maximization with One Input and One Output Profit Maximization with Two Inputs and One Output Profit Maximization with One Input and Two Outputs.

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I. Profit Maximization

I. Profit Maximization. A. Premise: market should reward the seller producing the best product at reasonable B. Competition between sellers is a good C. Leads to efficient use of resources. II. Social Responsibility. A. Characteristics B. Cost to society C. Advantages.

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I. Profit Maximization

I. Profit Maximization. A. Characteristics B. Influence of market forces. II. Social Responsibility. A. Characteristics B. Cost to society C. Advantages. III. Law as a Corporate Control Device. A. Public dissatisfaction will lead to legislation prohibiting

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Profit Maximization. We assume the goal of a firm is to maximize its profit. To do so it will have to decide what level of output the produce. We look at some general details here. Revenues and costs. Profit = TR-TC 13 25 31 31 25 13 -5.

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Monopoly Profit Maximization. Chapter 15-3. A Model of Monopoly. How much should the monopolistic firm choose to produce if it wants to maximize profit?. The Monopolist’s Price and Output Numerically.

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Profit maximization. By: Brian Murphy. Scenario. Given a function for cost with respect to quantity produced by a firm and market demand with respect to price set by the firm, find the price for a manufactured good that will optimize profits for the firm. Key variables:

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Profit Maximization and Derived Demand

Profit Maximization and Derived Demand. A firm’s hiring of inputs is directly related to its desire to maximize profits any firm’s profits can be expressed as the difference between total revenue and total costs, each of which can be regarded as functions of the inputs used

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Profit-Maximization. Economic Profit. Profit maximization provides the rationale for firms to choose the feasible production plan. Profit is the difference between revenues and costs.

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Module. Micro: Econ:. 17. 53. Profit Maximization. KRUGMAN'S MICROECONOMICS for AP*. Margaret Ray and David Anderson. What you will learn in this Module :. The principle of marginal analysis. How to determine the profit-maximizing level of output using the optimal output rule.

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Profit Maximization

Profit Maximization. Profits The objectives of the firm Fixed and variable factors Profit maximization in the short and in the long run Returns to scale and profits. Competitive Markets. In a competitive market firms take input and output prices as given

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Profit Maximization and Derived Demand

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Profit Maximization. What is the goal of the firm? Expand, expand, expand: Amazon. Earnings growth: GE. Produce the highest possible quality: this class. Many other goals: happy customers, happy workers, good reputation, etc.

407 views • 27 slides

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Profit Maximization. Ed. 7: Ch. 8, pgs 264-265, pgs 277-300 Ed. 6: Ch. 8, pages 265-266, pgs 278-304. Profit Maximization assuming:. Firm must charge every consumer the same price (i.e., no price discrimination) No Strategic Interaction among Firms We will consider two industry structures:

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Profit Maximization (Cont’d)

Profit Maximization (Cont’d). Renting or buying capital Profit maximization and returns to scale. Renting Capital. If physical capital is one of the firm’s inputs, the firm can either rent capital or buy it E.g.: firm can lease computers Problem solved by firm:. Buying Capital.

248 views • 18 slides

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