Resource Markets

study guide keywords

Derived Demand

the demand for a resource such as labor comes from the product the resource helps to produce

Marginal revenue product

represents the demand for labor

Marginal factor cost

represents the cost of labor

Monopsony

a market where there is only a single buyer for labor

shifts of demand curve for labor

* demand for the product
* changes in productivity
* changes in prices of other resources

Least cost rule

to minimize costs, a firm must adjust the ratio of inputs labor to be equivalent to its capital