15b.i. The Geometry of Input Demand
The MRPL, curve is a firm’s input demand curve. Remember that in a competitive input market the MRPL, curve is equal to the VMP curve. The input demand curve for a profit-maximizing firm is
downward sloping. This is because of the law of diminishing marginal returns which states that if a firm increases the amount of one input (in this case labor) while holding the quantity of other inputs constant, the marginal product of the extra input will decline over time. Since the marginal product of labor (MPL), the change in total output resulting from one extra unit of labor, declines and slopes downward as more workers are hired and as price of output remains constant, then it follows that the marginal revenue product of labor (MRPL) is downward sloping as well.
Fig. 1
P
Profit-maximizing
use of inputs
$ 7 w = AFCL = MFCL
MRPL = VMP
Q
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COORDINATE GEOMETRY PROOFS MAKE SURE YOU ARE FAMILIAR
COURSE UNIT TITLE LINEAR ALGEBRA AND ANALYTIC GEOMETRY II
EARTHQUAKES FAULTING BEACHBALLS MAGNITUDE SCALES FAULTING GEOMETRY FAULTING IS
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