Studied by 0 people
Looks like no one added any tags here yet for you.
Def of Labor
Human effort
Def of Land
All God-given gifts of nature
Def of capital
Any manufactured aid to production
Where does (resource) demand come from?
Firms
Where does (resource) supply come from?
Households
Def of income
The flow of wages, interest payments, dividends, and other things of value (money) during a period of time (1 year)
National income
Aggregate of all incomes
Wealth
Dollar value of assets owned at a given point in time, stock of things of value at a certain point in time.
Assets
Items of value owned
Liabilities
Financial obligations owed to others
Where is factor demand derived from?
The demand for factors of production comes from the demand for the output they can produce.
Production function
Gives the relationship between inputs and output for a given industry.
Total Product
The maximum amount of output that can be produced with a given set of inputs as a function of one of the inputs.
Marginal product (Marginal Physical product)
The extra or additional output produced when one more unit of an input is employed (other inputs held constant).
Marginal Revenue Product
The extra or additional revenue a firm receives from employing one more unit of an input
Marginal Resource Cost
The extra or additional cost incurred from hiring one more unit of input.
Rule of Demand
To maximize profits, a firm should keep hiring inputs until the MRP of the last unit hired equals its MRC.
Least Cost Rule
To produce any given level of output at least cost, a firm should hire inputs until the marginal product of the last dollar spent on each input is equal.
What does the “Marginal Productivity Theory of Income Distribution” say?
Fairness and economic justice are the result of a competitive capitalist economy.
On What ethical proposition is the “Marginal Productivity Theory of Income Distribution” based?
“To each according to what he creates”
Definition of Supply
The relationship between the price of an input and the quantity that households willingly supply.
Rule of Supply
