EC120 Chapter Notes - Chapter 18: Marginal Product, Demand Curve, W. M. Keck Observatory
carminegrasshopper545 and 38337 others unlocked
30
EC120 Full Course Notes
Verified Note
30 documents
Document Summary
Chapter 18: the markets for the factors of production. Factors of production: the inputs used to produce goods and services. Labour, land, and capital are the most important! The demand curve for a factor of production is a derived demand. A irm"s demand for a factor of production is derived from its decision to supply a good in another market. Production function: the relationship between the quantity of inputs used to make a good and the quantity of output of that good. Marginal product of labour: the increase in the amount of output from an additional unit of labour. Diminishing marginal product: the property whereby the marginal product of an input declines as the quantity of the input increases. Proit from an additional worker = worker"s contribution to revenue - Value of the marginal product: the marginal product of an input times the price of the output.