| Term | Definition |
|---|---|
| capital | A factor of production consisting of physical assets such as machinery, equipment, and structures used to produce goods and services. |
| factor markets | Markets where factors of production (labor, capital, and land) are bought and sold, and where factor prices are determined. |
| factor prices | The prices paid for factors of production (such as wages for labor, rent for land, and interest for capital) that provide incentives to firms and workers. |
| factors of production | The resources used to produce goods and services, including land, labor, capital, and entrepreneurship. |
| firms | Business organizations that combine factors of production to produce and sell goods or services. |
| interest | The price paid for the use of capital in factor markets. |
| labor | A factor of production representing human effort and services used in the production of goods and services. |
| land | A factor of production representing natural resources and physical space used in production. |
| marginal resource cost | The additional cost incurred by a firm when employing one more unit of a factor of production. |
| marginal revenue product | The additional revenue generated by employing one more unit of a factor of production, calculated as marginal product multiplied by marginal revenue. |
| output price | The market price of the goods or services that a firm produces, which affects the firm's demand for labor and other factors of production. |
| productivity | The output produced per unit of factor input, which influences a firm's decision to hire factors of production. |
| quantity of labor demanded | The amount of labor that firms are willing and able to hire at a given wage rate. |
| quantity of labor supplied | The amount of labor that workers are willing and able to provide at a given wage rate. |
| rent | The price paid for the use of land in factor markets. |
| wage rate | The price of labor, typically expressed as compensation per unit of time worked. |
| wages | The price paid for labor services in factor markets. |
| Term | Definition |
|---|---|
| age distribution | The composition of a population by age groups, which affects the size and characteristics of the available labor force. |
| factor prices | The prices paid for factors of production (such as wages for labor, rent for land, and interest for capital) that provide incentives to firms and workers. |
| factors of production | The resources used to produce goods and services, including land, labor, capital, and entrepreneurship. |
| immigration | The movement of workers into a country or region, which affects the supply of labor available to firms. |
| labor demand curve | A graph showing the relationship between the wage rate and the quantity of labor that firms are willing to hire at each wage level. |
| labor supply curve | A graph showing the relationship between the wage rate and the quantity of labor that workers are willing to supply at each wage level. |
| output price | The market price of the goods or services that a firm produces, which affects the firm's demand for labor and other factors of production. |
| preferences for leisure | Workers' relative desire for free time compared to work, which influences the quantity of labor they are willing to supply. |
| productivity of the worker | The amount of output a worker can produce per unit of time, which influences how much a firm is willing to pay for labor. |
| working conditions | The characteristics of a job environment (such as safety, hours, and workplace quality) that influence workers' willingness to supply labor. |
| Term | Definition |
|---|---|
| factor markets | Markets where factors of production (labor, capital, and land) are bought and sold, and where factor prices are determined. |
| fixed inputs | Factors of production whose quantity cannot be changed in the short run, such as capital or equipment. |
| labor | A factor of production representing human effort and services used in the production of goods and services. |
| marginal factor cost | The additional total cost incurred by a firm when hiring one more unit of a resource, including both the wage of the new worker and any wage increases given to existing workers. |
| marginal physical product | The additional output produced by one additional unit of a factor of production. |
| marginal product | The additional output produced by employing one more unit of a variable input, holding all other inputs constant. |
| marginal revenue product | The additional revenue generated by employing one more unit of a factor of production, calculated as marginal product multiplied by marginal revenue. |
| marginal revenue product of labor | The additional revenue a firm generates by hiring one more worker, calculated as the marginal physical product of labor multiplied by the marginal revenue. |
| perfectly competitive factor markets | Markets for factors of production (such as labor) where many buyers and sellers exist, firms are price-takers, and factors are homogeneous. |
| perfectly competitive labor market | A labor market where wages are determined by market supply and demand, and individual firms are wage-takers. |
| perfectly competitive markets | Markets characterized by many buyers and sellers, homogeneous products, free entry and exit, and perfect information where individual firms are price takers. |
| profit-maximizing behavior | The decision-making process by which firms choose the quantity of inputs to purchase and output to produce in order to maximize economic profit. |
| value of the marginal product of labor | The additional revenue generated by hiring one more worker, calculated as the marginal physical product of labor multiplied by the price of output. |
| Term | Definition |
|---|---|
| labor | A factor of production representing human effort and services used in the production of goods and services. |
| marginal factor cost | The additional total cost incurred by a firm when hiring one more unit of a resource, including both the wage of the new worker and any wage increases given to existing workers. |
| marginal revenue product | The additional revenue generated by employing one more unit of a factor of production, calculated as marginal product multiplied by marginal revenue. |
| monopsonistic labor market | A labor market in which a single firm or a small number of firms are the primary employers, giving them market power to influence wages. |
| monopsonistic markets | Markets in which a single buyer (monopsonist) purchases a good or service from many sellers, giving the buyer significant market power to influence prices. |
| profit-maximizing behavior | The decision-making process by which firms choose the quantity of inputs to purchase and output to produce in order to maximize economic profit. |
| supply price of labor | The wage rate at which workers are willing to supply their labor in the market. |