Factor Market
Definition
A factor market refers to the market where factors of production, such as labor, capital, and land, are bought and sold.
Analogy
Think of a factor market like a shopping mall for businesses. Just like how individuals go to a mall to buy goods and services, businesses go to a factor market to buy the resources they need for production.
Related terms
Factor Supply: Factor supply refers to the quantity of factors of production that producers are willing and able to sell at different prices.
Labor Supply: Labor supply specifically focuses on the quantity of labor that workers are willing and able to offer at different wage rates.
Capital Market: The capital market is another type of factor market where financial resources (such as loans or investments) are bought and sold for business purposes.
"Factor Market" appears in:
Subjects (1)
Study guides (2)
Practice Questions (17)
- What is the factor market?
- What determines the demand for resources in the factor market?
- Why is the demand for labor downward sloping in the factor market?
- Why is the supply of labor upward sloping in the factor market?
- When does a firm maximize its profit in the factor market?
- What happens if MRP is greater than MRC in the factor market?
- What happens if MRP is less than MRC in the factor market?
- What is the relationship between wage and labor supply in a factor market?
- How do government regulations and licensing impact the supply of workers in a factor market?
- How does a shortage of labor occur in a factor market?
- How does a decrease in labor productivity affect labor demand in a factor market?
- How does an increase in the price of a substitute resource affect factor demand in a factor market?
- How does an increase in the price of a complementary resource affect factor demand in a factor market?
- How does an increase in the price of the final product affect factor demand in a factor market?
- How does an increase in immigration affect the labor market equilibrium in a factor market?
- How does a decrease in the price of a factor of production affect factor demand in a factor market?
- In a monopsony, the factor market is characterized by?
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