Dominick Salvatore Schaums Outline of Microeconomics, 4th edition Schaums Outline Series 2006

CHAP. 6] THEORY OF PRODUCTION 131
hand, a movement from bottom to top in panel B of Table 6.6 corresponds to a movement from right to left in
Fig. 6-11, and we get the TP Land , the AP Land , and the MP Land . This movement from right to left along the horizontal
axis of the figure refers to a decline in the labor/land ratio (i.e., from 8/1to7/1, 6/1, ...,1/1). This is
the same thing as an increase in the land/labor ratio (i.e., 1/8 to1/7, 1/6, ...,1/1). The arrows in the figure
represent the direction of movements.
Fig. 6-11
(b)
From Fig. 6-11, we see that the TP Land , coincides precisely with the AP Labor and the AP Land coincides with the
TP Labor . Because of this, stage I for labor corresponds to stage III for land, stage II for labor covers the same
range as stage II for land, and stage III for labor corresponds to stage I for land. Thus there is perfect symmetry
between the stages of production for labor and land under constant returns to scale.
6.7 Assuming (1) constant returns to scale, (2) labor constant at one unit per time period, and (3) alternative
quantities of land used, ranging from 1/9 to 1 acre of land per time period, (a) find the TP of land from
Table 6.4; from this TP Land find the AP and the MP of land. (b) Plot on the same set of axes (as in Problem
6.6) the TP Labor , the AP Labor , and the MP Labor of Problem 6.1, and the TP Land , the AP Land , and the MP Land
found in part (a) of this problem, and define stages of production I, II, and III for labor and land.
(a) The values of the TP, the AP, and the MP of land are obtained as explained in Problem 6.5.
Table 6.7
Land Labor TP Land AP Land MP Land
1 1 2 2 ...
1
2
1 2 1 2
5 21
1
3
1 3 9 23
1
4
1 3 12 0
1
5
1 2 4 5
14 4
1
6
1 2 1 2
15 9
1
7
1 2 1 7
15 15
1
8
1 1 3 4
14 22
1
9
1 1 1 3
12 30