microeconomics chapter 16

  1. derived demand
    • demand for a factor of production that is derived from the good the factor
    • produces
  2. Marginal Revenue Product of Labor
    P x MP
  3. profit maximizing quantity of labor
    wage < MR
  4. shift factors for labor DEMAND
    • increase in human captial (training)
    • changes in technology
    • price change in the product
    • quantity change of other inputs
    • number of firms change
  5. increase in human captial (training)
    shifts right
  6. changes in technology
    shift right
  7. price change in the product
    shifts left
  8. quantity change of other input
    shifts to right
  9. number of firms change
    shifts left
  10. why individual supply curve of labor is backward bending
    substitution effect is dominant at the bottom and the income effect is dominant at the top
  11. shift factors for labor SUPPLY curve
    • increases in population R
    • changing demographics R/L
    • changing alternatives L
  12. equilibrium wage
    where labor demand equals labor supply
  13. differences in wages?
    more productive= more money... how much can you sell your specialty for?
  14. equilibrium prices in natural resources market
    where supply equals demand
  15. economic rent
    between supply and equilibrium price
Card Set
microeconomics chapter 16
factors of production