EC120 Chapter Notes - Chapter 18: Baby Boomers, Perfect Competition, Opportunity Cost

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6 Sep 2016

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Chapter 18: the markets for the factors of production. Factors of production: the inputs used to produce goods and services. Capital: the equipment and structures used to produce goods and services. Prices and quantities of these inputs are determined by supply and demand in factor markets. Markets for the factors of production are like markets for goods and services, except: Demand for a factor of production is a derived demand: derived from a rm"s decision to supply a good in another market. Two assumptions: we assume all markets are competitive. In the market for the product it produces. In the labour market: we assume that rms care only about maximizing pro ts. Each rm"s supply of output and demand for inputs are derived from this goal. Farmer jack sells wheat in a perfectly competitive market. He hires workers in a perfectly competitive labour market.

Related Questions

The term “derived demand” refers to the idea that

A. factor markets are less important than product markets.

B. a change in the demand for one good (cameras) will affect the demand for related goods (film).

C. a change in the demand for goods will affect the demand for the factors used to produce that good.

D. a change in the supply of a factor will affect the demand for a product produced with that factor.

E. a change in the supply of goods will affect the demand for the good.

erinplatypus702

All of the economic inputs that are required to produce goods and services are called:

a. Factors of production

b. Supply

c. Demand

d. Capital for production

coffeellama194

If labor productivity increases,

Question 8 options:

the demand for labor increases.

labor costs rise by equal increments.

jobs will relocate.

some workers will be laid off.

In labor markets, the substitution effect occurs when

Question 10 options:

a change in the price of a substitute input reduces the cost of capital.

a change in the price of a substitute input causes the demand for labor to change in the same direction.

a substitute good also functions as a compliment.

the cost of production falls enough that the firm will produce a larger amount of output.

The demand for labor is

Question 6 options:

	derived from the satisfaction that hiring the inputs provides the owner or manager of the firm more money.
	totally unrelated to the demand curve for the final product.
	derived from the demand for the final product being produced.
	derived from a utility-maximizing process similar to that used to derive the demand curve for goods and services.

blueleopard622

EC120 Chapter Notes - Chapter 18: Baby Boomers, Perfect Competition, Opportunity Cost

EC120 Full Course Notes

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