CHAPTER 6

The Production Process:

The Behavior of Profit-
Maximizing Firms

Prepared by: Fernando

Quijano
and Yvonn Quijano

2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
 Production

Central to our analysis is production:

Produksi proses yang

mengkombinasikan , mengolah ,
dan mengubah input menjadi output

2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
 What Is A Firm?

Perusahaan suatu organisasi yang

berdiri ketika seseorang yang berdiri
ketika seseorang atau kelompok oran
memutuskan untuk memproduksi
barang atau jasa untuk memenuhi
suatu permintaan . Sebagian besar
perusahaan berdiri untuk mencari
keuntungan produksi tidak terhingga
untuk perusahaan

2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
 Perfect Competition

Perfect competition is an industry

structure in which there are:
many firms, each small relative to the
industry,
producing virtually identical products and
in which no firm is large enough to have
any control over prices.
In perfectly competitive industries, new
competitors can freely enter and exit the
market.

2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
 Homogeneous Products

Produk homogen produk yang

tidak terdiferensiasi , produk-
produk yang identik dengan ,
atau tidak bisa dibedakan dari
satu sama lain

2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
 Competitive Firms are Price Takers

In a perfectly competitive market,

individual firms are price-takers.
This means that firms have no
control over price. Price is
determined by the interaction of
market supply and demand.

2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
 Demand Facing a Single Firm in a
Perfectly Competitive Market

If a representative firm in a perfectly competitive market rises the price

of its output above $2.45, the quantity demanded of that firm s output
will drop to zero. Each firm faces a perfectly elastic demand curve, d.

2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
 The Behavior of
Profit-Maximizing Firms
Ada 3 keputusan yang harus diambil oleh
semua perusahaan , yang meliputi :

1. 2. 3.
Berapa Bagaimana
Berapa
banyak teknologi
banyak tiap
output yang produksi apa
input yang
akan yang akan
diminta
ditawarkan digunakan

2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
 Profits and Economic Costs

Laba (keuntungan ekonomis ) selisih antara

penerimaan total dan biaya total
Penerimaan (revenue) total jumlah yang
diterima dari penjualan produk :
(q X P)
Biaya total (biaya total ekonomis) total dari
1. Biaya yang sudah dikeluarkan ,
2. Tingkat penghasilan normal atas modal
3. Biaya oportunitas tiap faktor produksi .

2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
 Normal Rate of Return

Tingkat penghasilan yang normal

tingkat yang cukup memadai untuk
membuat pemilik atau investor tetap
puas . Untuk perusahaan yang relatif
bebas risiko , penghasilannya hampir
sama dengan tingkat bunga obligasi
pemerintah yang bebas resiko .

2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
 Calculating Total Revenue, Total Cost,
and Profit

Initial Investment: $20,000

Market Interest Rate Available: .10 or 10%
Total Revenue (3,000 belts x $10 each) $30,000
Costs

Belts from supplier $15,000

Labor Cost 14,000
Normal return/opportunity cost of capital ($20,000 x .10) 2,000
Total Cost $31,000

Profit = total revenue total cost $ 1,000a

a
There is a loss of $1,000.

2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
 Short-Run Versus Long-Run Decisions

2 asumsi mendefinisikan jangka

pendek :
1. Perusahaan beroperasi pada Suatu
skala tetap ( atau faktor produksi tetap
) dan
2. Perusahaan Tidak bisa masuk atau
keluar dari industri itu

2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
 Short-Run Versus Long-Run Decisions

Jangka panjang jangka waktu

dimana tidak ada faktor produksi
yang tetap , perusahaan bisa
meningkatkan atau menurunkan
skala operasi dan perusahaan baru
bisa masuk dan perusahaan yang
sudah ada bisa keluar dari industri

2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
 Determining the Optimal Method
of Production
Price of output Production techniques Input prices

Determines Determine total cost and

total revenue optimal method of
production

Total revenue
Total cost with optimal method
=Total profit

The optimal method of production is the

method that minimizes cost.
2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
 The Production Process

Teknologi produksi hubungan kuantitas

antara input dan output

Teknologi padat karya teknologi yang

sangat mengandalkan tenaga kerja
manusia , bukan modal

Teknologi padat modal teknologi yang

sangat mengandalkan modal , bukan
tenaga kerja manusia

2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
 The Production Function

Fungsi produksi atau fungsi

produk total pernyataan
angka atu matematis
tentang hubungan antara
input dan output . Fungsi ini
memperlihatkan unit produk
total sebagai fungsi unit-unit
input

2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
 Marginal Product and Average Product

Produk marjinal output tambahan yang bisa

dihasilkan dengan menggunakan satu unit inut
tertentu atau lebih , ceteris paribus.
c h a n g e in to ta l p ro d u c t
m a rg in a l p ro d u c t o f la b o r =
c h a n g e in u n its o f la b o r u s e d

Produk rata rata jumlah rata rata yang

diproduksi oleh tiap unit faktor produksi
variabel
to ta l p ro d u c t
a v e ra g e p ro d u c t o f la b o r =
to ta l u n its o f la b o r

2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
 The Law of Diminishing
Marginal Returns

Hukum hasil yang

menurun :
Ketika unit tambahan suatu
input variabel ditambahkan
pada input tetap setelah suatu
titik tertentu , produk marjinal
input variabel menurun

2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
 Production Function for Sandwiches
45

Production Function 40
35
30

Total product
(2) (3) (4) 25
(1) TOTAL PRODUCT MARGINAL AVERAGE
20
LABOR UNITS (SANDWICHES PRODUCT OF PRODUCT
(EMPLOYEES) PER HOUR) LABOR OF LABOR 15
10
0 0 5
0
1 10 10 10.0
0 1 2 3 4 5 6 7
2 25 15 12.5 Number of employees
15
3 35 10 11.7

Marginal Product
10
4 40 5 10.0
5 42 2 8.4 5

6 42 0 7.0
0
0 1 2 3 4 5 6 7
Number of employees

2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
 Total, Average, and Marginal Product

Marginal product is the slope

of the total product function.
At point A, the slope of the
total product function is
highest; thus, marginal product
is highest.
At point C, total product is
maximum, the slope of the
total product function is zero,
and marginal product
intersects the horizontal axis.

2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
 Total, Average, and Marginal Product

When a ray drawn from the

origin falls tangent to the total
product function, average
product is maximum and equal
to marginal product.
Then, average product falls to
the left and right of point B.

2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
 Total, Average, and Marginal Product

As long as marginal product

rises, average product rises.

When average product is

maximum, marginal product
equals average product.

When average product falls,

marginal product is less than
average product.

2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
 Production Functions with Two Variable
Factors of Production
In many production processes, inputs work
together and are viewed as complementary.
For example, increases in capital usage lead to
increases in the productivity of labor.
Inputs Required to Produce 100 Diapers
Using Alternative Technologies Given the
UNITS OF UNITS OF technologies
TECHNOLOGY CAPITAL (K) LABOR (L) available, the
A 2 10
cost-minimizing
B 3 6
choice depends
C 4 4
D 6 3
on input prices.
E 10 2

2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
 Production Functions with Two Variable
Factors of Production

Cost-Minimizing Choice Among Alternative

Technologies (100 Diapers)

(2) (3) (4) (5)

(1) UNITS OF UNITS OF COST WHEN COST WHEN
TECHNOLOGY CAPITAL (K) LABOR PL = $1 PK = $1 PL = $1 PK = $1
A 2 10 $12 $52

B 3 6 9 33
C 4 4 8 24
D 6 3 9 21
E 10 2 12 20

2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair