Chapter 19 - Chapter 19 pricing factors of production...

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Chapter 19 pricing factors of production factors of production are the broad categories – land, labor, capital, exhaustible natural resources, and entrepreneurship – into which we classify the economy’s different productive inputs entrepreneurship is the act if starting new firms, introducing new products and technological innovations, and in general, taking the risks that are necessary to seek out business opportunities the principle of marginal productivity the marginal physical product of an input is the increase in the output that results from a one unit increase in the uses of the input holding the amounts of all other inputs constant. the marginal revenue product of an input is the money value of the additional sales that a firm obtains by selling the marginal physical product of that input. the marginal productivity principle states that the competitive factor markets, the profit maximizing firm will higher or by the quantity of any input at which the marginal revenue product equals the price of the input. inputs and their derived demand curves the demand curve for any input is downward sloping portion of its marginal revenue product curve. the derived demand for any input is the demand for the input by producers as determined by the demand for the final product that the input is used to produce. an outward shift in the demand curve for any commodity causes an outward shift
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This note was uploaded on 04/07/2008 for the course AREC 202 taught by Professor Dalstead during the Spring '08 term at Colorado State.

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Chapter 19 - Chapter 19 pricing factors of production...

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