宏观经济学PRODUCTION.pptxVIP

CHAPTER 20 PRODUCTIONIn the last chapter we described a general equilibrium model of a pure exchange economy, and discussed issues of resource allocation when a fixed amount of each good was available.In this chapter we want to describe how production fits into the general equilibrium framework. When production is possible, the amounts of the goods are not fixed but will respond to market prices. Robinson Crusoe economy: one consumer, one firm, and two goods. 20.1 The Robinson Crusoe Economy In this economy Robinson Crusoe plays a dual role: he is both a consumer and a producer. Figure 20.1 Figure 20.1 The Robinson Crusoe economy. The indifference curves depict Robinson’s Preferences for coconuts and leisure. The production function depicts the Technological relationship between the amount that he works and the amount of Coconuts （椰子）he produces. How much does Robinson work and how much does he consume? The highest indifference curve that just touches the production set.This means that the marginal product of an extra hour of labor must equal the marginal rate of substitution between leisure and coconuts.20.2 Crusoe, IncSuppose that Robinson is tired of simultaneously being a producer and consumer, and he decides to alternate roles. One day he will behave entirely as producer, and the next day he will behave entirely as a consumer. In order to coordinate these activities, he decides to set up a labor market and a coconut market. He also sets up a firm. Crusoe, Inc, and becomes its sole shareholder. The firm is going to look at the prices for labor and coconuts and decide how much labor to hire and how many coconuts to produce, guided by the principle of profit maximization. Robinson, in his role as a worker, is going to collect income from working at the firm; in his role as shareholder in the firm he will collect profits; and, in his role as consumer he will decide how much to purchase of the firm’s output. In order to keep track of his transactions, Robinson i