Lecture B (WK5)

Lecture B (WK5) - Lecture B (WK5) Welcome Back! Chapter 10...

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Lecture B (WK5) Welcome Back! Chapter 10 – Input Demand: The Labor and Land Markets In this lecture we turn from the pricing and production of goods and services to the pricing and employment of resources. Although firms come in various sizes and operate under highly different market conditions, they each have a derived demand for productive resources. They obtain those resources from households, the direct or indirect owners of land, labor, capital, and entrepreneurial resources. So, referring to the circular flow model on page 47 of the text, we shift our attention from the top loop of the diagram (where businesses supply products that households demand) to the bottom loop (where businesses demand resources that households supply). Resources must be used by all firms in producing their goods and services. The prices of these resources significantly contribute to the costs of production. The demand for a resource is derived from demand for products that the resource produces. Changes in
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This note was uploaded on 06/15/2010 for the course EC 142DLB taught by Professor Graceonodipe during the Spring '10 term at Park.

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Lecture B (WK5) - Lecture B (WK5) Welcome Back! Chapter 10...

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