The graph below shows a production function and the...

The graph below shows a production function and the subsistence level of output. a. Does the production function exhibit increasing or decreasing marginal productivity? b. Label a level of population at which the population is expected to grow. What is the surplus output at that population level? c. Label a level of population at which the population is expected to decline. Why is the population declining at this point? d. Label the population at which the economy is in long-run equilibrium. Why is this a long-run equilibrium? LO5 (GRAPH CANT COPY)

The graph below shows a production function and the subsistence level of output.
a. Does the production function exhibit increasing or decreasing marginal productivity?
b. Label a level of population at which the population is expected to grow. What is the surplus output at that population level?
c. Label a level of population at which the population is expected to decline. Why is the population declining at this point?
d. Label the population at which the economy is in long-run equilibrium. Why is this a long-run equilibrium? LO5
(GRAPH CANT COPY)

Key Concepts

Long-run Equilibrium

Long-run equilibrium in an economic model is achieved when the population and production levels are balanced. At this point, the surplus output is just enough to maintain the population, leading to stable economic and demographic conditions over time.

Surplus Output

Surplus output is the quantity of production that exceeds the subsistence level. This surplus is crucial because it allows for population growth and economic development, as it provides extra resources that can be invested in improvements.

Population Dynamics

Population dynamics in this context refer to how changes in surplus output influence the growth or decline of the population. A surplus may lead to population growth, while a shortfall below subsistence needs could result in a decline.

Marginal Productivity

Marginal productivity is the additional output produced by adding one more unit of an input. Whether this productivity is increasing or decreasing is key to understanding returns to scale and the efficiency of production processes.

Production Function

A production function explains the relationship between inputs, such as labor or capital, and the resulting output. It is a fundamental concept in economics that helps to illustrate how increases in inputs affect total production.

Subsistence Level of Output

The subsistence level of output represents the minimum amount of production necessary to sustain the population, ensuring that basic consumption needs are met without surplus for growth or investment.

Transcript

00:06 Living organisms in their natural habitat are exposed to a number of different factors that affect the way in which and the rate at which these individuals grow and reproduce.

00:27 For one thing, in a very ideal situation, these individuals of that species, of that species, they would be subject to no harmful factors, for instance, predators or no harmful bacteria, and their food source would be a multitude.

00:55 They would have a lot of food that would be able to sustain all of these individuals at however quick of a rate they would feel like eating.

01:09 So these factors would not affect the rate at which the individuals grow, reproduce, and these offspring are also able to grow and reproduce.

01:23 However, in a realistic setting, these factors do indeed affect the rate of growth of a population.

01:33 So there are, therefore, two different types of growth.

01:38 For one, in the first instance, we have exponential growth where the individuals start out somewhere at perhaps two or so, and they start to reproduce.

01:56 We see that after two years, they're at 20, four years, they're at 40, so they are doubling as the years go by.

02:09 Because these factors are not having an effect on their growth.

02:14 It's not limiting them.

02:17 In contrast, in a realistic setting, these individuals still starting at around a number of two or so, because we have to have two to reproduce.

02:33 They now start to grow in number.

02:39 We see that at two years, there are 30, three years, they're at 40, four years, 50 or so, five years, they're not at 60.

02:53 Let's change our color, color our pen.

03:07 So five years, or at about 60, six years, we see a bit of a leveling off.

03:17 They're not taking that projectile growth anymore.

03:22 Where they're starting to level off.

03:25 So at six years or number is here at 65, right? seven years, they're at 70, and when they get to eight years, well, the expectation would be that, hey, they would perhaps go to 80, but no, we see that they have remained at a number of more or less 70, which means that they are being affected by these external factors, the predators, the harmful bacteria or pathogens that may feed on them, these microscopic organisms, or the food source is limiting.

04:08 Perhaps it's a dry season and they don't have as much vegetation to feed on...

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