Econ Unit 5 Notes - Econ Unit 5 Notes Chapter 15 Pricing the Factors of Production Income is distributed when the market pays for factors of

Econ Unit 5 Notes - Econ Unit 5 Notes Chapter 15 Pricing...

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Econ Unit 5 NotesChapter 15 – Pricing the Factors of ProductionIncome is distributed when the market pays for factors of production (inputs used to make goods)These inputs are sold based on supply and demandTherefore the income distribution is dependent on the prices and quantities of these factorsFactors of Production: Land, Labor, Capital, Exhaustible natural resources, EntrepreneurshipEntrepreneurship: Act of starting new firms, introducing new products and technical innovation, RISK TAKERSMarginal Physical Product (MPP): is the increase in output that results from a one-unit increase in the use of the input (Ex: How much more work is that fourth employee doing)

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