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9 Cards in this Set

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factor markets
markets for labor, raw materials, and other inputs to production
competitive factor market
market in which tere are a large number of sellers and buyers of a factor production, such as labor or raw materials.
derived demand
demand for an input that depends on, and is derived from, both the firm's level of output and the cost of inputs.

(e.g. the demand of the Microsoft corporation for computer programmers is a derived demand that depends not only on the current salaries of programmers, but also on how much software Microsoft expectss to sell)
marginal revenue product
additional revenue resulting from the sale of output created by the use of one additional unit of an input
average expenditure curve
supply curve representing the price per unit that a firm pays for a good
Marginal expenditure curve
curve describing the additional cost of purchasing one additional unit of a good.
efficiency in a perfectly competitive market
in a perfectly competitive market, efficiency is achieved because the sum of aggregate consumer and producer surplus is maximized.
economic rent for a factor market
For a factor market, economic rent is the difference betweent he payments made to a factor of production and the minimum amount that must be spent to obtain the use of that factor.

In a labor market, rent is measured by the area below the wage level and above the marginal expenditure curve.
profit maximizing output condition
production is increased to the point at which marginal revenue is equal to marginal cost.