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Demand for resources
Demand for resources
Demand for resources
Demand for resources
Demand for resources
Demand for resources
Demand for resources
Demand for resources
Demand for resources
Demand for resources
Demand for resources
Demand for resources
Demand for resources
Demand for resources
Demand for resources
Demand for resources
Demand for resources
Demand for resources
Demand for resources
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Demand for resources

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  1. Significance of Resource PricingDeterminants of Resource DemandElasticity of Resource DemandOptimum Combination of Resources 27Marginal Productivity Theory of Resource DemandMRP as a Demand Schedule CHAPTERMarginal Productivity Theory of Income DistributionKey Terms The Demand forPrevious Slide End Next Slide Resources Show 27 - 1 Copyright McGraw-Hill/Irwin, 2002
  2. SIGNIFICANCE OF RESOURCE PRICINGSignificance of Resource PricingMarginal Productivity Theory of Resource Demand • Money IncomeMRP as a Demand ScheduleDeterminants of Resource DemandElasticity of Resource Demand DeterminationOptimum Combination of ResourcesMarginal Productivity Theory of Income DistributionKey Terms • Resource Allocation • Cost MinimizationPrevious Next • Ethical Questions and Policy Issues Slide Slide End Show 27 - 2 Copyright McGraw-Hill/Irwin, 2002
  3. MARGINAL PRODUCTIVITY THEORY OF RESOURCE DEMANDSignificance of Resource Pricing Resource Demand as a DerivedMarginal Productivity Theory of Resource DemandMRP as a Demand Schedule DemandDeterminants of Resource DemandElasticity of Resource Demand Marginal Revenue Product (MRP)Optimum Combination of ResourcesMarginal Productivity Theory of Income DistributionKey Terms •Productivity •Marginal Product (MP) •Product Price Marginal Change in Total RevenuePrevious Next Revenue = Slide Slide Unit change in Resource Quantity End Product Show 27 - 3 Copyright McGraw-Hill/Irwin, 2002
  4. MARGINAL PRODUCTIVITY THEORY OF RESOURCE DEMANDSignificance of Resource PricingMarginal Productivity Theory of Resource DemandMRP as a Demand Schedule MarginalDeterminants of Resource DemandElasticity of Resource Demand Change in Total (Resource) Cost Revenue =Optimum Combination of ResourcesMarginal Productivity Theory of Income Distribution Unit change in Resource QuantityKey Terms Cost Rule for Employing Resources: MRP = MRCPrevious Next Slide Slide End Show 27 - 4 Copyright McGraw-Hill/Irwin, 2002
  5. GLOBAL PERSPECTIVESignificance of Resource Pricing Labor Demand and Allocation: Selected NationsMarginal Productivity Theory of Resource DemandMRP as a Demand ScheduleDeterminants of Resource Demand Percentage of Labor ForceElasticity of Resource Demand 0 25 50 75 100Optimum Combination of ResourcesMarginal Productivity Theory of Income Distribution Agriculture DevelopingKey Terms Countries Industry Services Industrially Agriculture Advanced Industry Countries Services Agriculture UnitedPrevious Slide Next Slide States Industry End Services Show 27 - 5 Source: International Labour Organization Copyright McGraw-Hill/Irwin, 2002
  6. MRP AS A DEMAND SCHEDULE Pure CompetitionSignificance of Resource Pricing Total Marginal Marginal Units of ProductMarginal Productivity Theory of Resource Demand product Product Total RevenueMRP as a Demand Schedule Resource (Output) (MP) Price Revenue Product (MRP)Determinants of Resource Demand 0 $20$ 0Elasticity of Resource Demand ] ]Optimum Combination of ResourcesMarginal Productivity Theory of Income Distribution ] ] ] ] Consider the case of]Key Terms ] ] resource demand under ] ] ] Pure Competition P 14 Resource price 12 (wage rate) 10 8 6Previous Next Slide Slide 4 2 End Show 0 1 2 3 4 5 6 7 8 Q 27 - 6 Quantity of resource demanded Copyright McGraw-Hill/Irwin, 2002
  7. MRP AS A DEMAND SCHEDULE Pure CompetitionSignificance of Resource Pricing Total Marginal Marginal Units of ProductMarginal Productivity Theory of Resource Demand product Product Total RevenueMRP as a Demand Schedule Resource (Output) (MP) Price Revenue Product (MRP)Determinants of Resource Demand 0 0 $2 $ 0Elasticity of Resource Demand 1 7 ] 7 2 14 ] $ 14Optimum Combination of ResourcesMarginal Productivity Theory of Income Distribution ] ]Key Terms ] ] ] ] ] ] ] ] P 14 Resource price 12 (wage rate) 10 8 6Previous Next Slide Slide 4 2 End Show 0 1 2 3 4 5 6 7 8 Q 27 - 7 Quantity of resource demanded Copyright McGraw-Hill/Irwin, 2002
  8. MRP AS A DEMAND SCHEDULE Pure CompetitionSignificance of Resource Pricing Total Marginal Marginal Units of ProductMarginal Productivity Theory of Resource Demand product Product Total RevenueMRP as a Demand Schedule Resource (Output) (MP) Price Revenue Product (MRP)Determinants of Resource Demand 0 0 $2 $ 0Elasticity of Resource Demand 1 7 ] 7 2 14 ] $ 14Optimum Combination of Resources ] 6 ] 12 2 13Marginal Productivity Theory of Income Distribution 2 26Key Terms ] ] ] ] ] ] ] ] P 14 Resource price 12 (wage rate) 10 8 6Previous Next Slide Slide 4 2 End Show 0 1 2 3 4 5 6 7 8 Q 27 - 8 Quantity of resource demanded Copyright McGraw-Hill/Irwin, 2002
  9. MRP AS A DEMAND SCHEDULE Pure CompetitionSignificance of Resource Pricing Total Marginal Marginal Units of ProductMarginal Productivity Theory of Resource Demand product Product Total RevenueMRP as a Demand Schedule Resource (Output) (MP) Price Revenue Product (MRP)Determinants of Resource Demand 0 0 $2 $ 0Elasticity of Resource Demand 1 7 ] 7 2 14 ] $ 14Optimum Combination of Resources ] 6 ] 12 2 13 2 26 10Marginal Productivity Theory of Income Distribution 5Key Terms 3 18 ] 2 36 ] ] ] ] ] ] ] P 14 Resource price 12 (wage rate) 10 8 6Previous Next Slide Slide 4 2 End Show 0 1 2 3 4 5 6 7 8 Q 27 - 9 Quantity of resource demanded Copyright McGraw-Hill/Irwin, 2002
  10. MRP AS A DEMAND SCHEDULE Pure CompetitionSignificance of Resource Pricing Total Marginal Marginal Units of ProductMarginal Productivity Theory of Resource Demand product Product Total RevenueMRP as a Demand Schedule Resource (Output) (MP) Price Revenue Product (MRP)Determinants of Resource Demand 0 0 $2 $ 0Elasticity of Resource Demand 1 7 ] 7 2 14 ] $ 14Optimum Combination of Resources ] 6 ] 12 2 13 2 26 10Marginal Productivity Theory of Income Distribution 5Key Terms 3 18 ] 4 2 36 ] 8 4 22 ] 3 2 44 ] 6 5 25 ] 2 2 50 ] 4 6 27 2 54 7 28 ] 1 2 56 ] 2 P 14 Resource price 12 (wage rate) 10 The purely competitive 8 seller’s demand for 6 a resourcePrevious Next Slide Slide 4 2 End Show 0 1 2 3 4 5 6 7 8 Q 27 - 10 Quantity of resource demanded Copyright McGraw-Hill/Irwin, 2002
  11. MRP AS A DEMAND SCHEDULE Pure CompetitionSignificance of Resource Pricing Total Marginal Marginal Units of ProductMarginal Productivity Theory of Resource Demand product Product Total RevenueMRP as a Demand Schedule Resource (Output) (MP) Price Revenue Product (MRP)Determinants of Resource Demand 0 $2 0 $ 0Elasticity of Resource Demand 1 ] 7 2 714 ] $ 14 ] 12 26 ]Optimum Combination of Resources 6 2 13 2 10 5Marginal Productivity Theory of Income Distribution 3 ] 18 2 36 ] Now, consider the case ] 8Key Terms 4 4 ] 3 22 2 44 6 5 ] 2 25 2 50 ] of resource demand under 4 6 27 2 54 ] 1 ] 2 Imperfect Competition 7 28 2 56 14 P Resource price 12 (wage rate) 10 The purely competitive 8 seller’s demand for 6 a resourcePrevious Next Slide Slide 4 2 End Show 0 1 2 3 4 5 6 7 8 Q 27 - 11 Quantity of resource demanded Copyright McGraw-Hill/Irwin, 2002
  12. MRP AS A DEMAND SCHEDULE Imperfect CompetitionSignificance of Resource Pricing Total Marginal Marginal Units of ProductMarginal Productivity Theory of Resource Demand product Product Total RevenueMRP as a Demand Schedule Resource (Output) (MP) Price Revenue Product (MRP)Determinants of Resource Demand 0 0 $2.80 $ 0Elasticity of Resource Demand 1 7 ] 7 2.60 18.20 ] $ 18.20Optimum Combination of Resources ] 6 ] 13.00 2 13 2.40 31.20 8.40Marginal Productivity Theory of Income Distribution 5Key Terms 3 18 ] 4 2.20 39.60 ] 4.40 4 22 ] 3 2.00 44.00 ] 2.25 5 25 ] 2 1.85 46.25 ] 1.00 6 27 1.75 47.25 7 28 ] 1 1.65 46.20 ] -1.05 P 14 Resource price 12 The imperfectly (wage rate) 10 8 Competitive seller’sPrevious Next 6 demand for a resource Slide Slide 4 2 End Show 0 1 2 3 4 5 6 7 8 Q 27 - 12 Quantity of resource demanded Copyright McGraw-Hill/Irwin, 2002
  13. DETERMINANTS OF RESOURCE DEMAND Changes in Product DemandSignificance of Resource PricingMarginal Productivity Theory of Resource DemandMRP as a Demand Schedule Changes in ProductivityDeterminants of Resource DemandElasticity of Resource DemandOptimum Combination of Resources • Quantities of OtherMarginal Productivity Theory of Income DistributionKey Terms Resources • Technological ProgressPrevious Next • Quality of the Variable Slide Slide End Show Resource 27 - 13 Copyright McGraw-Hill/Irwin, 2002
  14. DETERMINANTS OF RESOURCE DEMAND Changes in the Prices ofSignificance of Resource PricingMarginal Productivity Theory of Resource DemandMRP as a Demand Schedule Other ResourcesDeterminants of Resource Demand Substitute ResourcesElasticity of Resource DemandOptimum Combination of Resources • Substitution EffectMarginal Productivity Theory of Income DistributionKey Terms • Output Effect • Net Effect Complementary ResourcesPrevious Slide Next Slide Occupational Employment End Show 27 - 14 Trends Copyright McGraw-Hill/Irwin, 2002
  15. ELASTICITY OF RESOURCE DEMANDSignificance of Resource Pricing Percentage change in resource quantityMRP as a Demand Schedule Erd =Marginal Productivity Theory of Resource Demand Percentage change in resource priceDeterminants of Resource DemandElasticity of Resource Demand Rate of MP DeclineOptimum Combination of ResourcesMarginal Productivity Theory of Income DistributionKey Terms Ease of Resource Substitutability Elasticity of Product Demand Ratio of Resource Cost to Total Next Cost RatioPrevious Slide Slide End Show 27 - 15 Copyright McGraw-Hill/Irwin, 2002
  16. OPTIMUM COMBINATIONSignificance of Resource Pricing OF RESOURCES Least-Cost RuleMarginal Productivity Theory of Resource DemandMRP as a Demand Schedule Least-Cost Combination of ResourcesDeterminants of Resource DemandElasticity of Resource DemandOptimum Combination of Resources MP of LaborMarginal Productivity Theory of Income Distribution MP of CapitalKey Terms Price of Labor Price of Capital Profit-Maximizing Combination MRPL MRPCPrevious Slide End Show Next Slide PL PC 1 27 - 16 Copyright McGraw-Hill/Irwin, 2002
  17. MARGINAL PRODUCTIVITY THEORY OF INCOME DISTRIBUTIONSignificance of Resource Pricing InequalityMarginal Productivity Theory of Resource DemandMRP as a Demand ScheduleDeterminants of Resource DemandElasticity of Resource DemandOptimum Combination of ResourcesMarginal Productivity Theory of Income DistributionKey Terms Market Imperfections ChapterPrevious Slide Next Slide Conclusions End Show 27 - 17 Copyright McGraw-Hill/Irwin, 2002
  18. derived demand marginal product (MP) marginal revenue product (MRP) marginal resource cost (MRC) MRP = MRC rule substitution effect output effect elasticity of resource demand least-cost combination of resources profit-maximizing combination of resources marginal productivity theory of income distributionCopyright McGraw-Hill/Irwin 2002 BACK END
  19. Significance of Resource Pricing NEXTMarginal Productivity Theory of Resource DemandMRP as a Demand ScheduleDeterminants of Resource DemandElasticity of Resource DemandOptimum Combination of ResourcesMarginal Productivity Theory of Income DistributionKey Terms Wage DeterminationPrevious Next Slide Slide End Show Chapter 28 27 - 19 Copyright McGraw-Hill/Irwin, 2002

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