The markets for the Factors of production Chapter 18
The Markets for the Factors of Production Chapter 18
Factors of Production Factors of production are the inputs used to produce goods and services
Factors of Production • Factors of production are the inputs used to produce goods and services
The market for the Factors of production o The demand for a factor of production is a derived demand A firms demand for a factor of production is derived from its decision to supply a good in another market
The Market for the Factors of Production • The demand for a factor of production is a derived demand. – A firm’s demand for a factor of production is derived from its decision to supply a good in another market
The demand for labor Labor markets, like other markets in the economy are governed by the forces of supply and demand o Most labor services, rather than being final goods ready to be enjoyed by consumers, are inputs into the production of other goods
The Demand for Labor • Labor markets, like other markets in the economy, are governed by the forces of supply and demand. • Most labor services, rather than being final goods ready to be enjoyed by consumers, are inputs into the production of other goods
TheⅤ ersatility of Supply and demand. ●● (a) The Market for Apples (b) The Market for Apple Pickers Wage of Price of Apple Apples Supply p Ickers upply P m■ Demand Demand Quantity 0 Quantity of of Apples Apple Pickers
(a) The Market for Apples (b) The Market for Apple Pickers Quantity of Apples Quantity of Apple Pickers Q L P W 0 0 Price of Apples Wage of Apple Pickers Demand Demand Supply Supply The Versatility of Supply and Demand