微观经济学thecostofproduction(编辑修改稿)

微观经济学thecostofproduction(编辑修改稿)内容摘要：

Rate In our example, depreciation rate was % and interest was 10%, so r = % + 10% = % 169。 2020 Pearson Education, Inc. Chapter 7 42 Cost Minimizing Input Choice  How do we put all this together to select inputs to produce a given output at minimum cost?  Assumptions Two Inputs: Labor (L) and capital (K) Price of labor: wage rate (w) The price of capital r = depreciation rate + interest rate Or rental rate if not purchasing These are equal in a petitive capital market 169。 2020 Pearson Education, Inc. Chapter 7 43 Cost in the Long Run The Isocost Line A line showing all binations of L amp。 K that can be purchased for the same cost Total cost of production is sum of firm’s labor cost, wL, and its capital cost, rK: C = wL + rK For each different level of cost, the equation shows another isocost line 169。 2020 Pearson Education, Inc. Chapter 7 44 Cost in the Long Run Rewriting C as an equation for a straight line: K = C/r (w/r)L Slope of the isocost:  (w/r) is the ratio of the wage rate to rental cost of capital.  This shows the rate at which capital can be substituted for labor with no change in cost  rwLK 169。 2020 Pearson Education, Inc. Chapter 7 45 Choosing Inputs We will address how to minimize cost for a given level of output by bining isocosts with isoquants We choose the output we wish to produce and then determine how to do that at minimum cost Isoquant is the quantity we wish to produce Isocost is the bination of K and L that gives a set cost 169。 2020 Pearson Education, Inc. Chapter 7 46 Producing a Given Output at Minimum Cost Labor per year Capital per year Isocost C2 shows quantity Q1 can be produced with bination K2,L2 or K3,L3. However, both of these are higher cost binations than K1,L1. Q1 Q1 is an isoquant for output Q1. There are three isocost lines, of which 2 are possible choices in which to produce Q1. C0 C1 C2 A K1 L1 K3 L3 K2 L2 169。 2020 Pearson Education, Inc. Chapter 7 47 Input Substitution When an Input Price Change If the price of labor changes, then the slope of the isocost line changes, (w/r) It now takes a new quantity of labor and capital to produce the output If price of labor increases relative to price of capital, and capital is substituted for labor 169。 2020 Pearson Education, Inc. Chapter 7 48 Input Substitution When an Input Price Change C2 The new bination of K and L is used to produce Q1. Combination B is used in place of bination A. K2 L2 B C1 K1 L1 A Q1 If the price of labor rises, the isocost curve bees steeper due to the change in the slope (w/L). Labor per year Capital per year 169。 2020 Pearson Education, Inc. Chapter 7 49 Cost in the Long Run How does the isocost line relate to the firm’s production process? KL MPMP M RT S  LKrwLK  l i nei s o c o s t of Sl o peco stmi n i mi ze sf i rmw h e nrwMPMPKL 169。 2020 Pearson Education, Inc. Chapter 7 50 Cost in the Long Run The minimum cost bination can then be written as:  Minimum cost for a given output will occur when each dollar of input added to the production process will add an equivalent amount of output. rw KLMPMP 169。 2020 Pearson Education, Inc. Chapter 7 51 Cost in the Long Run If w = $10, r = $2, and MPL = MPK, which input would the producer use more of? Labor because it is cheaper Increasing labor lowers MPL Decreasing capital raises MPK Substitute labor for capital until rMPwMP KL 169。 2020 Pearson Education, Inc. Chapter 7 52 Cost in the Long Run Cost minimization with Varying Output Levels For each level of output, there is an isocost curve showing minimum cost for that output level A firm’s expansion path shows the minimum cost binations of labor and capital at each level of output Slope equals K/L 169。 2020 Pearson Education, Inc. Chapter 7 53 A Firm’s Expansion Path Expansion Path The expansion path illustrates the leastcost binations of labor and capital that can be used to produce each level of output in the longrun. Capital per year 25 50 75 100 150 50 Labor per year 100 150 300 200 A $2000 200 Units B $3000 300 Units C 169。 2020 Pearson Education, Inc. Chapter 7 54 Expansion Path and Long Run Costs Firm’s expansion path has same information as longrun total cost curve To move from expansion path to LR cost curve Find tangency with isoquant and isocost Determine min cost of producing the output level selected Graph outputcost bination 169。 2020 Pearson Education, Inc. Chapter 7 55 A Firm’s Long Run Total Cost Curve Long Run Total Cost Output, Units/yr 100 300 200 Cost/ Year 1000 2020 3000 D E F 169。 2020 Pearson Education, Inc. Chapter 7 56 Long Run Versus Short Run Cost Curves In the short run, some costs are fixed In the long run, firm can change anything including plant size Can produce at a lower average cost in long run than in short run Capital and labor are both flexible We can show this by holding capital fixed in the short run and flexible in long run 169。 2020 Pearson Education, Inc. Chapter 7 57 Capital is fixed at K1. To produce q1, min cost at K1,L1. If increase output to Q2, min cost is K1 and L3 in short run. The Inflexibility of Short Run Production LongRun Expansion Path Labor per year Capital per year L2 Q2 K2 D C F E Q1 A B L1 K1 L3 P ShortRun Expansion Path In LR, can change capital and min costs falls to K2 and L2. 169。 2020 Pearson Education, Inc. Chapter 7 58 Long Run Versus Short Run Cost Curves  LongRun Average Cost (LAC)  Most important determinant of the shape of the LR AC and MC curves is relationship between scale of the firm’。