Changes in Factor Demand and Supply - AP Microeconomics
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How does a decrease in the cost of capital affect labor demand?
How does a decrease in the cost of capital affect labor demand?
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Labor demand might decrease. Cheaper capital substitutes for labor input.
Labor demand might decrease. Cheaper capital substitutes for labor input.
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What is the effect of a decrease in taxes on factor supply?
What is the effect of a decrease in taxes on factor supply?
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Factor supply increases. Lower taxes increase net returns to suppliers.
Factor supply increases. Lower taxes increase net returns to suppliers.
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What is the effect of a decrease in interest rates on capital supply?
What is the effect of a decrease in interest rates on capital supply?
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Capital supply increases. Lower interest rates reduce capital costs.
Capital supply increases. Lower interest rates reduce capital costs.
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What happens to factor demand when there is a decrease in the demand for the product?
What happens to factor demand when there is a decrease in the demand for the product?
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Factor demand decreases. Factor demand derives from product demand.
Factor demand decreases. Factor demand derives from product demand.
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What effect does a decrease in transportation costs have on factor supply?
What effect does a decrease in transportation costs have on factor supply?
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Factor supply increases. Lower transport costs make factors more accessible.
Factor supply increases. Lower transport costs make factors more accessible.
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Identify the effect on labor supply if retirement age is postponed.
Identify the effect on labor supply if retirement age is postponed.
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Labor supply increases. Delayed retirement keeps workers in labor force.
Labor supply increases. Delayed retirement keeps workers in labor force.
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What happens to factor supply when working conditions improve?
What happens to factor supply when working conditions improve?
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Factor supply increases. Better conditions attract more workers to supply.
Factor supply increases. Better conditions attract more workers to supply.
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Find the impact on factor demand when the price of output increases.
Find the impact on factor demand when the price of output increases.
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Factor demand increases. Higher output prices increase MRP and factor demand.
Factor demand increases. Higher output prices increase MRP and factor demand.
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Identify a factor that can increase the supply of labor.
Identify a factor that can increase the supply of labor.
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Increased immigration policies. Immigration increases available labor force.
Increased immigration policies. Immigration increases available labor force.
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Find the impact on factor supply when wages increase due to a shortage.
Find the impact on factor supply when wages increase due to a shortage.
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Factor supply increases. Higher wages attract more factor suppliers.
Factor supply increases. Higher wages attract more factor suppliers.
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Which factor can increase the demand for skilled labor?
Which factor can increase the demand for skilled labor?
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Advancements in technology requiring new skills. Technology advances create demand for new skills.
Advancements in technology requiring new skills. Technology advances create demand for new skills.
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What is the effect of an increase in factor productivity on factor demand?
What is the effect of an increase in factor productivity on factor demand?
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It increases factor demand. Higher productivity raises MRP and factor demand.
It increases factor demand. Higher productivity raises MRP and factor demand.
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What is the effect of improved training programs on factor supply?
What is the effect of improved training programs on factor supply?
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It increases factor supply. Training improves worker skills and availability.
It increases factor supply. Training improves worker skills and availability.
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What effect does an increase in factor price have on factor demand?
What effect does an increase in factor price have on factor demand?
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It decreases factor demand. Higher prices reduce quantity demanded via law of demand.
It decreases factor demand. Higher prices reduce quantity demanded via law of demand.
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What happens to factor demand when productivity increases?
What happens to factor demand when productivity increases?
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Factor demand increases. Higher productivity increases MRP and demand.
Factor demand increases. Higher productivity increases MRP and demand.
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What occurs when the cost of a complementary factor decreases?
What occurs when the cost of a complementary factor decreases?
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Factor demand increases. Cheaper complements increase demand for both factors.
Factor demand increases. Cheaper complements increase demand for both factors.
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How does an increase in consumer demand for a product affect factor demand?
How does an increase in consumer demand for a product affect factor demand?
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It increases factor demand. Higher product demand increases derived factor demand.
It increases factor demand. Higher product demand increases derived factor demand.
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What effect does a government subsidy have on factor supply?
What effect does a government subsidy have on factor supply?
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It increases factor supply. Subsidies lower production costs, encouraging supply.
It increases factor supply. Subsidies lower production costs, encouraging supply.
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What is the impact on factor supply if education levels increase?
What is the impact on factor supply if education levels increase?
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Factor supply increases. Education improves worker productivity and availability.
Factor supply increases. Education improves worker productivity and availability.
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Which factor causes an increase in factor supply?
Which factor causes an increase in factor supply?
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An increase in the number of suppliers. More suppliers increase market availability.
An increase in the number of suppliers. More suppliers increase market availability.
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State the formula for the marginal revenue product (MRP).
State the formula for the marginal revenue product (MRP).
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$MRP = MR \times MP$. MRP equals marginal revenue times marginal product.
$MRP = MR \times MP$. MRP equals marginal revenue times marginal product.
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What happens to factor demand if the price of a substitute factor falls?
What happens to factor demand if the price of a substitute factor falls?
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Factor demand decreases. Cheaper substitutes reduce demand for original factor.
Factor demand decreases. Cheaper substitutes reduce demand for original factor.
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Identify one factor that can cause a decrease in factor supply.
Identify one factor that can cause a decrease in factor supply.
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A natural disaster affecting resource availability. Natural disasters reduce factor availability.
A natural disaster affecting resource availability. Natural disasters reduce factor availability.
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What effect does a technological advancement have on factor demand?
What effect does a technological advancement have on factor demand?
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It increases the demand for that factor. Technology improves productivity, raising MRP.
It increases the demand for that factor. Technology improves productivity, raising MRP.
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What causes an increase in the demand for a factor of production?
What causes an increase in the demand for a factor of production?
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An increase in the demand for the product it helps produce. Factor demand is derived from product demand.
An increase in the demand for the product it helps produce. Factor demand is derived from product demand.
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Identify the impact of an increase in the price of raw materials on factor demand.
Identify the impact of an increase in the price of raw materials on factor demand.
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Factor demand decreases. Higher input costs reduce profitability and factor demand.
Factor demand decreases. Higher input costs reduce profitability and factor demand.
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What effect does a decrease in technology costs have on factor demand?
What effect does a decrease in technology costs have on factor demand?
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Factor demand increases. Cheaper technology increases its demand as factor.
Factor demand increases. Cheaper technology increases its demand as factor.
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Which factor can decrease the demand for labor?
Which factor can decrease the demand for labor?
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Automation or technology replacing labor. Technology substitutes for human workers.
Automation or technology replacing labor. Technology substitutes for human workers.
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Identify the effect of unionization on factor demand.
Identify the effect of unionization on factor demand.
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It can decrease factor demand. Unions may increase wages, reducing quantity demanded.
It can decrease factor demand. Unions may increase wages, reducing quantity demanded.
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What happens to factor supply if there is a tax on production?
What happens to factor supply if there is a tax on production?
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Factor supply decreases. Production taxes increase costs, reducing supply.
Factor supply decreases. Production taxes increase costs, reducing supply.
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