Resource Markets

Vocabulary

demand for labor

the amount of labor or number of workers that firms are looking to hire

demand for loanable funds

the amount of money that firms want to borrow to fund purchases of physical capital

derived demand

a demand formed out of the need for something else, an indirect demand

factor of production

input used during the creation of products

interest rate

cost of borrowing money, expressed as a percentage of the amount borrowed; or, equivalently, the return on savings

involuntary unemployment

wherein a person desires to work at the minimum or accepted wage but is instead without a job

labor market

the market where employers hire workers and workers look for jobs

leisure

time spent not working

marginal product of labor (MPL)

the incremental output produced by hiring an additional unit of labor while keeping all other inputs to production the same

marginal revenue product of labor (MRPL)

the incremental revenue created by an additional unit of labor

market for loanable funds

the interaction between individuals trying to save and earn a return and firms trying to borrow in order to purchase physical capital

physical capital

a factor of production or input to the production process such as machinery, buildings or computers

present value (PV)

the value from today's perspective of a sequence of future costs and payments

quantity of labor

the number of worker-hours, worker-days, etc., supplied or demanded in a labor market

resource market

where businesses go to purchase inputs needed for production

supply of labor

the total amount of hours that employees are available to work

supply of loanable funds

the amount of money available in the market for loans