Chapter 18

Chapter 18 goes over the factors of production. The factors of production are three things, labor, land and capitol. Labor is the people who do the work, land is the physical space the work is done, and capitol is the equipment and buildings that are used. The chapter then mostly goes in depth on labor and the demand and supply of labor. Labor follows the same principles as traditional demand and supply curves, the x axis being quantity of laborers and the y axis being the wage, or price, of laborers. The marginal product is the addition of output that is had when another worker is hired. The value of the marginal product of labor is the value of the output of the workers which is just the price times the marginal product. Lastly marginal profit is the additional profit that is had when a new worker is hired. Labor experiences a diminishing marginal product which is when with each addition of a worker the increase in output. The labor curves on the graph can shift due to outside forces which will change the equilibrium wages and quantities for labors. For example a technological advance will shift the labor demand curve to the right and immigration would shift the labor supply curve to the right. I give this chapter a 1 out of 3. This topic is very similar to the original supply and demand curves so it was easy to understand the labor curves.