chapter 13 full - Chapter 13 Labor- the work done by...

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Chapter 13 Labor - the work done by workers Capital - machinery, equipment, structures and vehicles that people work with Land - an important input into many production processes Energy from oil, coal, natural gas, electricity and other sources are used in most production processes Materials are used by many production processes, such as bricks, wood, plastics and steel Labor, capital, land, energy and materials are inputs called factors of production . Each market is called a factor market or input market . Derived demand - the demand for factors of production is derived from the demand for goods Marginal revenue product - of labor, as the additional revenue the firm gets when it hires on additional worker and then sells one extra output that is made by that extra worker. The marginal revenue product of capital is the extra revenue the firm makes when it employs one more machine and then sells the additional output. Marginal product (marginal physical product)- the extra output that is produced by an extra unit of input Marginal revenue - the additional revenue the firm gets when it sells the additional output. For a firm that is perfectly competitive in its output market, marginal revenue is the market price. MRP = (MP) x (MR), for any firm MRP = (MP) x (P), for a firm that is perfectly competitive in its output because MR is the same as P The marginal revenue product curve can be expected to slope downward as we move from left to right, regardless of the market structure in the firm’s output market. A perfectly competitive firm in its input market, the optimal hiring decision comes at the
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chapter 13 full - Chapter 13 Labor- the work done by...

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