ECO2201_Slides_9.1_Demand_for_Resources.pdf

ECO2201_Slides_9.1_Demand_for_Resources.pdf -...

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Sorakom (Baltic) Ngamdecho Department of Business Economics ECO 2201 Microeconomics Lesson 9.1 Demand for resources 1 Sorakom (Baltic) Ngamdecho Department of Business Economics Demand for Resources ECO 2201 Lesson 9.1 1. Introduction 2. Deriving Resource Demand ì Rule for Employing Resources ì Rule for Producing Goods 3. Determinants of Resource Demand ì Changes in product demand ì Changes in productivity ì Changes in the price of substitute resources ì Changes in the price of complementary resources Road Map 1
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Sorakom (Baltic) Ngamdecho Department of Business Economics ECO 2201 Microeconomics Lesson 9.1 Demand for resources 2 1. Introduction ì What Is a Resource Market? ì Market for goods and services trades what firms produce with money income from households (consumers). ì Market for resources trades factor of productions. ì Suppliers of factors (or inputs) are households ì Demanders of factors are firms. ì Example: Apple ì Suppliers in the market for goods and services ì Demanders in the market for resources 2 ì What Is a Resource Market? ì Resources include land, labor, capital and entrepreneurial skills. ì This lesson will focus only on market for labor resources. ì But, the analysis discussed is applicable to other resources. 1. Introduction 3
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Sorakom (Baltic) Ngamdecho Department of Business Economics ECO 2201 Microeconomics Lesson 9.1 Demand for resources 3 ì Significance of Resource Pricing ì Money-income determination : Resource prices are a major factor in determining the income of households. ì Cost minimization : To firms, resource prices represent costs. To make the most money, firms must produce at the profit-maximizing output with the least costly combination of resources. ì Resource allocation : Resource prices help in the allocation of resources among the various industries and firms that need them. ì Policy issues : Many policy issues are grounded on resource pricing 1. Introduction 4 2. Deriving Resource Demand ì Why firms need resources? ì Because the firms need to produce goods or provide services. ì Why the firms need to produce goods or provide services? ì Because there is the demand for goods and services in the market.
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