ECON 1 Chapter Notes - Chapter 11: Liquid Oxygen, W. M. Keck Observatory, Marginal Revenue Productivity Theory Of Wages

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Lo1: identify examples of resource demand and supply in daily life. Firms demand resources as long as marginal revenue is greater than marginal cost. Households supply resources to the highest paying alternative. Derived demand: arrives from demand for the final product. As prices fall, producers are more willing to buy(relatively cheaper) and have greater ability to buy(hire more at the same total cost) Market demand: sum of demands for that resource in all different uses. Permanent price differences no shift; lack of resource mobility, differences in inherent quality f resource, differences in time and money involved in development necessary skills, or differences in nonmonetary aspects of job. Lo3: define opportunity cost and economic rent. Opportunity cost; what a resource could earn in its best alternative use. Economic rent: a portion of a resource"s earnings that exceeds the amount necessary to keep the resource in present use. Earnings include both economic rent and opportunity costs.

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