ch 18 terms

Question 1

what are factors of production

Answer 1

labor, land, capital

Question 2

most important factor of production

Answer 2

labor

Question 3

what makes up 60% of income in canada

Answer 3

labor

Question 4

define derived demand

Answer 4

demand for factors of production based on demand for goods sold by hiring firm

Question 5

marginal product of labor equation

Answer 5

change in quantity produced/change in labor

Question 6

value of marginal product of labour
VMPL
equation

Answer 6

price x marginal product of labor

Question 7

what does production function graph show

Answer 7

diminishing returns on relationship between inputs and outputs

Question 8

what do profit maxing firms care about

Answer 8

profit more important than # of units produced
must find efficient balance

Question 9

things that shift labour demand curve

Answer 9

output price
tech advancement
supply of other factors of production

Question 10

what affects shifts in supply of labour curve

Answer 10

wage changes based on:
change in societal taste
change in alt opportunities
immigration: more supply

Question 11

equation for labour market equilibrium

Answer 11

wage = value of marginal product of labour

Question 12

how does immigration affect labour demand and supply

Answer 12

if high skilled: labour demand increases because more consumers of products
if low skilled: labour supply increases

Question 13

define capital

Answer 13

stock of equipment and structures used for production

Question 14

how are factors of production linked

Answer 14

external factor that impacts one factor of production affects all others as well
ex. equipment destroyed so labour less efficient