AP Microeconomics / Unit 5: Factor Markets
5.1 Introduction to Factor Markets
Notes
In factor markets, firms demand labor, land and capital; households supply them.
- Factor demand is derived demand: it depends on demand for the product.
Practice
The demand for bakers depends on the demand for bread. This is:
Factor demand comes from product demand.
In factor markets, households are:
They supply resources.
The price of labor is the:
Payment to labor.
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