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12 Cards in this Set
- Front
- Back
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Why are resource prices important?
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Money-income determination
Cost minimization resource allocation Policy issues |
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Derived demand depends on
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Productivity of resource (MP) and Price(P) of the good it helps produce
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What determines resource demand?
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Product demand and Changes in productivity
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What causes changes in productivity?
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Quantities of other resources
Technological advance Quality of the variable resource |
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Rising employment
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1)Services
2) health care 3) Computers |
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Declining employment
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Labor saving technological change and textiles
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Elasticity of product demand
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If the demand for he roduct is inelastic, the increase in the amount of the product demanded will be small.
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Elasticity of resource demand measures...
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Measures the extent to which producers change the quantity of a resource they hire when its price changes.
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Least cost rule
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Last dollar spent on each resource yields the same marginal product
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Profit maximizing rule
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MRP of each resource equals its price
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Income Distribution
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Pay according to value of service.
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What's wrong with income distribution
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Inequality: Everyone can't work
Market imperfection: not all markets are the same |
