18 Book Notes, Econ 201 - 18BookNotes,Econ201...

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18 Book Notes, Econ 201 Factors of Production:  the inputs used to produce goods and services  Labor, Land & Capital  The demand for a factor of production is a  derived demand In the Market for Factors of Production, we assume 2 things: 1. Our firm is  competitive  both in the market for the good and the service to get the good 2. The firm is  Profit-Maximizing Production Function:  The relationship between the quantity of inputs used to make a good and the quantity of output of that  good  Marginal Product of Labor:  The increase in the amount of output from an additional unit of labor Diminishing Marginal Product:  The property whereby the marginal product of an input declines as the quantity of the input  increases  Value of the Marginal Product:  The marginal product of an input times the price of the output  Marginal Revenue Product:
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