69: Introduction and Factor Demand Flashcards
factor of production
resource used by firms to produce goods and services that are consumed by households
physical capital
manufactured equipment and resources
human capital
improved labor from education, knowledge
derived demand
demand for the factor comes from the demand for the firm’s output
how labor contributes to income
wages and salaries
how capital contributes to income
profits from stocks
how land contributes to income
profits from renting out land or buildings
how enterprise contributes to income
profits from entrepreneurial success
factor distribution of income
division of total income among land, labor, capital, and enterprise
marginal cost of worker in perfect comp
wage rate
marginal product of labor
additional output each marginal worker can produce
value of the marginal product of labor
VMPL = P x MPL
individual firm’s demand curve in perfect comp
VMPL
causes of shifts to factor demand curve (3)
changes in price of produce, supply of other factors, tech