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Big Ideas about Factor, or Resource,Markets

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Big Ideas about Factor, or Resource,Markets. 1. The economic concepts are similar to those for product markets. 2. The demand for a factor of production is derived from the demand for the good or service produced from this resource.

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Big Ideas about Factor, or Resource,Markets

1. The economic concepts are similar to those for product markets.

2. The demand for a factor of production is derived from the demand for the good or service produced from this resource.

3. A firm tries to hire additional units of a resource up to the point where the resource’s marginal revenue product (MRP) is equal to its marginal resource cost (MRC).

4. In hiring labor, a perfectly competitive firm will do best if it hires up to the point where MRP = the wage rate.Wages are the marginal resource cost of labor.

5. If you want a high wage:

(A) Make something people will pay a lot for.

(B) Work for a highly productive firm.

(C) Be in relatively short supply.

(D) Invest in your human capital.

6. Real wages depend on productivity.

7. Productivity depends on real or physical capital, human capital, labor quality and technology.

Unit 4 : Microeconomics

National Council on Economic Education

the demand for a resource perfect competition in the sale of the product
The Demand for a Resource: PerfectCompetition in the Sale of the Product

Unit 4 : Microeconomics

National Council on Economic Education

the demand for a resource imperfect competition in the sale of the product
The Demand for a Resource: ImperfectCompetition in the Sale of the Product

Unit 4 : Microeconomics

National Council on Economic Education

the supply of and demand for labor in a competitive labor market
The Supply of and Demand for Labor in aCompetitive Labor Market

Unit 4 : Microeconomics

National Council on Economic Education

the wage rate and level of employment in a monopsonistic labor market
The Wage Rate and Level of EmploymentIn a Monopsonistic Labor Market

Unit 4 : Microeconomics

National Council on Economic Education

the determination of economic rent
The Determination of Economic Rent

Unit 4 : Microeconomics

National Council on Economic Education

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