The Markets for the Factors of Production
POLICY FOR Full EMPLOYMENT To create I state of full employment is nut an easy job. No simple and straight remedy can he prescribed for thc purpose, There is no panacea which .,all cure a country of unemployment nt ami create conditions offull employment. The problem...
The Markets for the Factors of Production
PROBLEMS AND APPLICATION 1. Suppose that the president proposes a new law aimed at reducing healthcare costs: All Americans are requited to eat one apple daily. a. How would this apple-a-day law affect the demand and equilibrium price of apples? b. How would the law...
The Markets for the Factors of Production
QUESTIONS FOR REVIEW 1. Explain how a firm’s production function is related to its marginal product of labor, how a firm’s marginal product of labor is related to the value of its marginal product, and how a firm’s value of marginal product is...
The Markets for the Factors of Production
CONCLUSION This chapter explained how labor, land, and capital are compensated for the roles they play in the ‘Production process. The theory developed here is called the neoclassical theory of distribution. According to the neoclassical theory, the amount paid...
The Markets for the Factors of Production
CASE STUDY THE ECONOMICS OF THE BLACK DEATH In 14th-century Europe, the bubonic plague wiped out about one-third of the population within a few years. This event, called the Black Death. provides a grisly natural experiment to test the theory of factor markets that we...
The Markets for the Factors of Production
LINKAGES AMONG THE FACTOR FOR PRODUCTION We have seen that the price paid to any factor of production-labor, land, or capital=equals the value of the marginal product of that factor. The marginal product of any factor, in turn, depends on the quantity of that factor...
