Chapter 18 - The Market for the Factors of Production Flashcards
1
Q
Factors of Production
A
Land
Labour
Capitol - equipment used
2
Q
Derived demand
A
The demand for land capitol and labour is a derived demand because it is derived from the need to supply goods
3
Q
Value of the Marginal Product
A
The amount of value each additional worker brings
4
Q
Profit Maximizing
A
A competitive, profit-maximizing firm hires workers up to the point at which the value of the marginal product of labor equals the wage.
5
Q
Substitution Effect
A
Wage increases, opportunity cost of leisure increases
6
Q
Income Effect
A
