Production Analysis

Concepts

  • Short-Run Production Analysis (Function)
    • Relationship Between Quantity of Inputs and Quantity of Output
    • Total Product
    • Marginal Product (“n-shaped”)
      • Increasing Marginal Returns (Increasing Marginal Product)
        • Efficiency from Specialization
      • Decreasing Marginal Returns (Decreasing Marginal Product)
        • Inefficiency from Law of Diminishing Marginal Returns (LDMR)
    • Relationship Between Marginal Product and Total Product
      • MP Slope of TP
      • Total Product Maximized When MP=0
    • Average Product (“n-shaped”)
    • Relationship Between Marginal Product and Average Product
      • Marginal Values Change First, then Average Values Respond
      • When MP > AP, Pulls AP Up
      • When MP < AP, Pulls AP Down
      • MP = AP at the Max of AP
  • Link Between Production Analysis and Cost Analysis
    • Almost Like Reflections of Each Other

Overview

Production analysis is all about measuring how productive our inputs are in terms of the amount of output they produce.  The productivity of raw materials, labor, and capital can all be measured using production analysis.  In every analysis from this unit, there are 3 general calculations we focus on: total, marginal and average values.  We will observe the connection between total product and marginal product.  We look at how marginal values are the incremental changes to their respective total.  This is why marginal product is the slope of total product.  We will also observe the coneection between marginal product and average product.  We look at how marginal product changes first, then average product responds.  We learn that when marginal values are greater than the average, it pulls the average up and vice versa.  Next, we observe what causes the n-shape of production curves. In the short-run it’s caused by increasing and decreasing marginal returns. In the long-run it’s caused by increasing and decreasing returns to scale.  We conclude by observing the link between production analysis/cost analysis and how their per-unit graphs are almost like mirrored reflections of each other.

Materials

Lecture

Specialization, Division of Labor

 

Law of Diminishing Marginal Returns Video

 

Production Analysis Video

 

Production Analysis Video Lecture

Quiz

Reminders Before Taking Quiz:

  • When you are asked “What Period?” please only put the one digit number of your class period. For example, if you have this class 1st period, just put 1 in the box for your response.
  • The password to login is CASE SENSITIVE, so please be conscious of this as you type in your password.
  • If it appears to be timing out when you login, try the following troubleshooting steps:
    1. Restart your phone (hard shut down and turn it back on)
    2. Turn off WiFi (access quiz through your data carrier)
    3. Click the “Classroom Link” provided in the initial email. Login, and then select this quiz from the list.

CLICK HERE TO TAKE QUIZ

Comments are closed.