Principles of Economics- Mankiw (5th) 398

Principles of Economics- Mankiw (5th) 398 - 410 PA R T S I...

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410 PART SIX THE ECONOMICS OF LABOR MARKETS QUICK QUIZ: How does an immigration of workers affect labor supply, labor demand, the marginal product of labor, and the equilibrium wage? THE OTHER FACTORS OF PRODUCTION: LAND AND CAPITAL We have seen how firms decide how much labor to hire and how these decisions determine workers’ wages. At the same time that firms are hiring workers, they are also deciding about other inputs to production. For example, our apple- producing firm might have to choose the size of its apple orchard and the number of ladders to make available to its apple pickers. We can think of the firm’s factors of production as falling into three categories: labor, land, and capital. The meaning of the terms labor and land is clear, but the definition of capital is somewhat tricky. Economists use the term capital to refer to the stock of equip- ment and structures used for production. That is, the economy’s capital represents
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This note was uploaded on 07/30/2010 for the course ECON 120 taught by Professor Abijian during the Spring '10 term at Mesa CC.

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