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Chapter 21
Total output
45 (per day) D
40
35 C
30
25
20 Output rates depend
15 B on input levels
10
5
0
A 1 2 3 4 5 6 7 8
Labor Input (machine operators per day)
45 (per day) D
40 + 10 jeans
35 C
30 Third worker
25
20 Marginal physical product
15 B c
b d (per worker)
10
e
5 f g
A h
0
a 1 2 3 4 5 6 7 8
i
Labor Input (machine operators per day)
45 (per day) D
40
35 C
30
25
20 Marginal physical product
15 B c
b d (per worker)
10
e
5 f g
A h
0
a 1 2 3 4 5 6 7 8
i
Labor Input (machine operators per day)
c 1.00 1/g
st
20
ma
l co
rgi
Dimphy
16 0.80
na
na
b
l
rgi
ini sica
12 0.60
ma
sh l p
d
ing ro
1/f
in g
8 0.40
Ris
e 1/e
du
f
g h
0 1 2 3 4 5 6 7 8 0 1 2 3 4 5 6 7
Labor Input i Labor Input
J ATC
16 O
K
L M N
12
8 AVC
4 AFC
0 10 20 30 40 50
Rate of Output (pairs per day)
15
s t
10 q
p r
5
10 20 30 40 50
Rate of Output (pairs per day)
24
20
16
12 ATC
AVC
8 m
4
n AFC
0 1 2 3 4 5 6 7 8 9
Rate of Output (units per time period)
ATC1
ATC2
ATC3
Long-run average
total cost (LATC)
0 40 a 60 b c
Rate of Output (pairs of jeans per day)
ATC2
LATC
m2
0 q2
Rate of Output (jeans per day)
ATC3
ATC1
ATCS ATCS ATC2 ATCS m3
m1
m2
c c c
0 QM 0 QM 0 QM
RATE OF OUTPUT RATE OF OUTPUT RATE OF OUTPUT
(units per period) (units per period) (units per period)
wage rate
Unit labor cost =
MPP
ATC2
MC1
MC2
End of Chapter 21