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