How do you know when one more is too much?

Slides:

Advertisements

Similar presentations

How do you know when one more is too much?

Advertisements

LAW OF DIMINISHING RETURNS. What is the Purpose? The Purpose of the Law of Diminishing Returns is to measure how efficient a business is making a product,

The Law of Diminishing Marginal Returns and Business Costs The factory makes chairs. It has only two inputs of production: capital and labor. Labor is.

How Do Firms Turn Inputs Into Output? DO NOW: Do all workers add the same amount to the output of a firm? 1.

1. What does the Law of Supply state?

FrontPage: What value would you put on a human life? The Last Word: Ch1 Reviewing Key Concepts due next Tuesday Ch 1 quiz next Tuesday.

Supply Section 1 SUPPLY SSupply - The amount of goods produced at different prices Law of SUPPLY: The higher the price, the greater the quantity supplied.

Efficiency Consumer, Producer and Markets. Efficiency Defined Overall: Greatest human satisfaction from scarce resources. Allocative Efficiency – resources.

Consumer Choice and Utility Maximization

THEORY OF THE FIRM 6.1 THE LAW OF DIMINISHING RETURNS 1.

The Laws of Demand and Supply.

1 Essential Question: Explain the goal of checking “Productivity;” define input and output; list and describe fixed costs, variable costs, and marginal.

Consumer Choice and Utility Maximization

Drill 9/17 Determine if the following products are elastic or inelastic: 1. A goods changes its price from $4.50 to $5.85 and the demand for the good goes.

COSTS OF PRODUCTION How do producers decide how much of a good to produce?

Supply and Demand. Law of Demand The rule people will buy more at lower prices than at higher prices if all other factors are constant You must be able,

Marketing Management 6.01 Part 3 The Production Process.

Economics Chapter 5 Supply.

Costs of Production How much to produce?. Labor and Output How the number of workers affects total production?

Supply Chapter 5 Section 2.

1.Productivity 2.Costs of Production Amount of goods and services produced per unit of input How efficiently their resources are being used in production.

Who can make paper footballs the fastest? Warm Up: How does a producer come up with the price he/she charges for a product?

Marginal Productivity Theory. Marginal Physical Product Extra Output from each additional unit of resource.

Lesson Objectives: By the end of this lesson you will be able to: *Explain how firms decide how much labor to hire in order to produce a certain level.

Article: In the News at the Local Multiplex You own a movie theater. It’s a nice size. You are doing well and ready to expand. What is the advantage of.

Costs of Production and Changes in Supply. Labor and Output Marginal product of labor- change in output from hiring one more worker. Marginal product.

Cost of Production Chapter 5 Section 2 As a business –Ask yourself how many workers do I hire? –Marginal product of labor Change in output for hiring.

MAKING PRODUCT DECISIONS Economics, March  Remember: we are the supplier, making decisions about what to PRODUCE!

Do Now 1)What is the difference between supply and quantity supplied? 2)Are hotel rooms elastic or inelastic? Why? 3)What do producers have to consider.

Marginal Analysis. Vocabulary Marginal= one more unit of something Marginal Analysis= a type of decision making that compares the extra benefits to the.

Mr. Weiss Section 13 – Module 71 Activity – More on Marginal Product Quantity of Labor Total Output O The following table.

Production= Converting inputs into output

Total, Average and Marginal Products The Total Product Curve shows the maximum output attainable from a given amount of a fixed input (capital) as the.

Production Chapter 5.3. Warm-Up “Two’s company, but three’s a crowd.” What does this saying mean? How have you seen it apply to your own life?

Chapter 5 Section 2 The Theory Of Production. Production Functions Figure that shows how total output changes based on the change of a single variable.

Calculating Marginal Utility. Marginal Utility Is the extra satisfaction generated from consuming one more unit of a good Is the extra satisfaction generated.

The Law of Supply What is Supply?.

Unit 3: Costs of Production and Perfect Competition

Unit 3: Costs of Production and Perfect Competition

Chapter 5: Supply Section 2

[ 3.5 ] Costs of Production.

Marketing Management 6.01 Part 3

What Is Demand?.

Unit 3: Costs of Production and Perfect Competition

Consumer Choice: Maximizing Utility

© EMC Publishing, LLC.

Supply & Demand #2: Law of Demand.

Chapter 5 Section 2.

Supply Unit 3, Part 2 Chapter 5.

Marginal Cost and Marginal Benefit

An Introduction to Demand

Consumer Choice: Maximizing Utility

Marginal product first rises due to increasing marginal returns and then falls due to diminishing marginal returns. Adding workers first increases output.

Unit 3: Costs of Production and Perfect Competition

Unit 3: Costs of Production and Perfect Competition

The art of Supply and Demand

Supply & Demand: Law of Demand.

Marginalism Effective decision making requires comparing the additional costs with additional benefits. Most choices involve doing a little more or a.

Unit 3: Costs of Production and Perfect Competition

Demand and Supply Chapters 4, 5 and 6.

Chapter 5: Supply Section 2

PRODUCTION AND PRODUCTIVITY

How do you know when one more is too much?

Unit 3: Costs of Production and Perfect Competition

Supply & Demand #2: Law of Demand.

PRODUCTION Understand Long Run V. Short Run

Chapter 5: Supply Section 2

Copyright © 2005 Pearson Education Canada Inc.

Chapter 5: Supply Section 2

Presentation transcript:

How do you know when one more is too much?

Marshmallow Activity Why did you stop buying marshmallows? How many more marshmallows will you eat at a price of zero?

Marginal utility is the extra value or additional satisfaction a consumer obtains from consuming one additional unit of output. What happened to each student’s total satisfaction with each marshmallow purchased and eaten? What happened to the additional satisfaction or marginal utility as more marshmallows were purchased and eaten?

Diminishing marginal utility is when the additional satisfaction or marginal utility associated with consuming additional units of the same product in a given amount of time eventually declines.

Think of the following examples in relation to the quantity purchased considering diminishing marginal utility

Marginal analysis is a decision-making tool for comparing the additional or marginal benefits of a course of action to the additional or marginal costs.

Watch the following video https://www.youtube.com/watch?v=0BAMv6lV2t4

How does marginal analysis affect your decision making:

Review What is Marginal Utility Explain Diminishing Marginal Utility What is Marginal analysis

Glove Factory Example Tape off 36x48” area Two pairs of scissors two pens and paper One desk in the middle with supplies One worker to start Track number of workers & gloves produced Go for one minute and stop

Glove Production Table Number of Workers (1) Number of Gloves Produced (2) (3) (4) (5)

Add another worker

Glove Production Table New Category Glove Production Table Number of Workers (1) Number of Gloves Produced (2) Marginal Product (3) (4) (5)

Marginal product is the additional output produced by each successive unit of an input.

Add a third worker What is the marginal product of the 2nd and 3rd workers Then a 3rd, 4th, 5th, 6th, 7th, 8th 9th while tracking the results

Glove Production Table Number of Workers (1) Number of Gloves Produced (2) Marginal Product (3) Value of Additional Gloves Produced (4) Marginal Cost of Labor (1 min worked) (5) ? .12

The law of diminishing returns states that as more units of a variable input are added to one or more fixed inputs, eventually the number of additional units of output produced will begin to fall.

Marginal cost is the increase in a producer’s total cost when it increases its output by one unit.