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Factor Markets

QuestionAnswer
Name the four factors of production Land, labour, capital, enterprise
What is the return on land? Rent
What is the return on labour? Wages
What is the return on capital? Interest
What is the return on enterprise? Profit/loss
What kind of demand do factors of production have? Derived
What are specific & non-specific factors? A specific factor is one with few alternative uses
What is marginal revenue productivity? The extra revenue earned when an additional unit of a factor of production is employed
What portion of the MRP curve is the demand curve for labour? The downwards sloping section
What is the MRP theory of wages? The wage of each worker is equal to to the MRP of the last worker
Why do firms hoard labour? Speculations on demand, and ease of retaining over training
Why does the MRP curve slope downwards from left to right? Diminishing marginal return, and the law of demand
Define Marginal physical product The extra output produced when one extra unit of a factor of production is employed
Name 3 factors which affect MRP. Productivity of a factor, marginal revenue, the law of demand
Name 4 factors which affect MPP. Quality of factors, education provided, expertise of entrepreneur, diminishing marginal returns
Why is MRP difficult to calculate? Contribution of capital/labour is
Name the four factors of production Land, labour, capital, enterprise
What is the return on land? Rent
What is the return on labour? Wages
What is the return on capital? Interest
What is the return on enterprise? Profit/loss
What kind of demand do factors of production have? Derived
What are specific & non-specific factors? A specific factor is one with few alternative uses
What is marginal revenue productivity? The extra revenue earned when an additional unit of a factor of production is employed
What portion of the MRP curve is the demand curve for labour? The downwards sloping section
What is the MRP theory of wages? The wage of each worker is equal to to the MRP of the last worker
Why do firms hoard labour? Speculations on demand, and ease of retaining over training
Why does the MRP curve slope downwards from left to right? Diminishing marginal return, and the law of demand
Define Marginal physical product The extra output produced when one extra unit of a factor of production is employed
Name 3 factors which affect MRP. Productivity of a factor, marginal revenue, the law of demand
Name 4 factors which affect MPP. Quality of factors, education provided, expertise of entrepreneur, diminishing marginal returns
Why is MRP difficult to calculate? Contribution of capital/labour is hard to gauge, some services are not sold on the market
How is MRP calculated in perfect competition? MPP * Price
How is MRP calculated in imperfect competition? MRP*MR
Define supply price The minimum price needed to bring a factor of production into use
Define transfer earnings What a factor must earn to stop it from transfering to its next best alternative employment
Name two factors affecting transfer earnings Productivity of the factor. Length of time under consideration.
Define economic rent Any earnings in excess of supply price
Define quasi economic rent Temporary economic rent
Created by: JackEatonK98
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