Chapter
27
Demand
in
the
Factor
Market
Copyright
2002 by The McGraw­Hill Companies, Inc.
All rights reserved.
27­1
Chapter
Objectives
Derived
demand
Productivity
Marginal
revenue
product
Changes
in
resource
demand
The
substitution
and
output
effects
Optimum
resource
mix
for
the
firm
Copyright
2002 by The McGraw­Hill Companies, Inc.
All rights reserved.
27­2
Derived
Demand
Derived
demand
is
the
demand
for
resources
There
are
four
resources:
land,
labor,
capital,
and
entrepreneurial
ability
The
demand
for
these
resources
is
derived
from
the
demand
for
the
final
products
The
demand for land on which to
grow corn is
derived from
the
demand for
corn
The
demand for labor with which to
produce
cars
is
derived from
the
demand for
cars
Copyright
2002 by The McGraw­Hill Companies, Inc.
All rights reserved.
27­3