McConnell Brue Flynn Microeconomics 20e Chapter 14

The demand for a resource is derived from the demand for the products that the resource helps to produce. resource demand is an example.

Additional output resulting from using each additional unit of labor.

The change in total revenue resulting from the use of each additional unit of a resource. (labor in this case)

The amount that each additional unit of resource adds to the firms total resource cost.

It will be profitable for a firm to hire additional units of a resource up to the point at which that resource's MRP is equal to its MRC.

The decrease in the price of machinery prompts the firm to substitute machinery for labor. This decreases the demand for labor.

Because the price of machinery has fallen, the costs of producing various outputs must also decline. With lower costs, the firm finds it profitable to produce and sell a greater output. The greater output increases the demand for all resources including labor. This effect increases the demand for labor.

Erd= Percentage change in resource quantity demanded/ percentage change in resource price.

The quantity of each resource that a firm must employ in order to produce a particular output at the lowest total cost.

When each resource is employed to the point at which its MRP equals its resource price.

Income is distributed according to ones societal output