Title
(4) Optimal Variable Input Use Model
Topic Category
Production
Publication Date
2011
Keywords
Optimal Input Use, Marginal Revenue Product, Marginal Physical Product, Marginal Factor Cost, Marginal Input Cost, Derived Demand
Abstract
This presents the optimal variable input use model. It introduces the key concepts of Marginal Physical Product, Marginal Revenue Product, and Marginal Factor Cost. The optimal input rule is presented, and this is linked to information on production, demand for the final product, and the price in the input market.
Recommended Citation
Crane, Steven E., "(4) Optimal Variable Input Use Model" (2011). Principles of Microeconomics. Paper 33.
http://epublications.marquette.edu/microecon_learning/33
Run Time
10:05
Primary Discipline
Microeconomics
Skills Delivered
Ability to determine the optimal amount of a variable input in the short run. Ability to identify and explain Marginal Revenue Product and Marginal Factor Cost. Ability to explain what causes the optimal amount of variable input to change. Ability to explain the interplay of the output market, input market and production function in all of the above.
Rigor Level
2000
Prerequisites
Previous Demand, Supply, & Production Videos