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1、TheMarketsfortheFactorsofProduction©2015CengageLearning.AllRightsReserved.Maynotbecopied,scanned,orduplicated,inwholeorinpart,exceptforuseaspermittedinalicensedistributedwithacertainproductorserviceorotherwiseonapassword-protectedwebsiteforclassroomuse.1FactorsofProductionFactorsofproductionInput
2、susedtoproducegoodsandservicesLaborLandCapitalDemandforafactorofproductionDeriveddemandFromfirm’sdecisiontosupplyagoodinanothermarket©2015CengageLearning.AllRightsReserved.Maynotbecopied,scanned,orduplicated,inwholeorinpart,exceptforuseaspermittedinalicensedistributedwithacertainproductorserviceo
3、rotherwiseonapassword-protectedwebsiteforclassroomuse.2Figure14©2015CengageLearning.AllRightsReserved.Maynotbecopied,scanned,orduplicated,inwholeorinpart,exceptforuseaspermittedinalicensedistributedwithacertainproductorserviceorotherwiseonapassword-protectedwebsiteforclassroomuse.TheVersatilityof
4、SupplyandDemandWageofapplepickersPriceofapplesThebasictoolsofsupplyanddemandapplytogoodsandtolaborservices.Panel(a)showshowthesupplyanddemandforapplesdeterminethepriceofapples.Panel(b)showshowthesupplyanddemandforapplepickersdeterminethewageofapplepickers.Quantityofapples0(a)ThemarketforapplesQua
5、ntityofapplepickers0(b)ThemarketforapplepickersSupplyDemandQPSupplyDemandLWTheDemandforLaborAssumptionsforthecompetitivefirmFirmiscompetitiveinbothmarketsForgoodsandforlaborPricetakerPaythemarketwageGetthemarketpriceforgoodsDecideQuantityofgoodstosellQuantityoflabortohireFirmisprofit-maximizing5©
6、2015CengageLearning.AllRightsReserved.Maynotbecopied,scanned,orduplicated,inwholeorinpart,exceptforuseaspermittedinalicensedistributedwithacertainproductorserviceorotherwiseonapassword-protectedwebsiteforclassroomuse.TheDemandforLaborProductionfunctionRelationshipbetweenthequantityofinputsusedtom
7、akeagoodAndthequantityofoutputofthatgoodBecomesflatterasthequantityofinputincreases6©2015CengageLearning.AllRightsReserved.Maynotbecopied,scanned,orduplicated,inwholeorinpart,exceptforuseaspermittedinalicensedistribute