EC120 Lecture 14: EC120- Chapter 18 Factors of Production
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Value of the marginal product is marginal product times the price of the firm"s output: technological change. New and better ways of doing things: the supply of other factors. The quantity available of one factor of production can affect the marginal product of other factors. Fall in demand for ladders, reduce marginal product of apple pickers and thus the demand for apple pickers will fall. The supply of labour: what causes labour supply curve shift, changes in taste. Change in norm of women staying at home as opposed to working outside of home: changes in alternative opportunities. Depends on labour opportunities available in other markets. Movement of workers from region to region. Equilibrium in the labour market: the wage adjusts to balance the supply and demand for labour, the wage equals the value of the marginal product of labour, shifts in labour supply, ex. Immigration increases number of workers willing to pick apples.