Labor factor market demand and supply curve

Labor is an important factor of production.  Consequently, labor factor market demand and the supply curve has become an important aspect in the production process.  Labor as factor market refers to a situation whereby there is purchase and sale of labor services. On the other hand, a labor supply curve shows the number of workers who are willing and able to work in an occupation at different wages. Labor demand curve shows the number of workers that firms are able and willing to hire at given wages (Bernheim & Whinston, 2013).  There are different variables that influence the labor market in terms of demand and supply curve. It is essential to point out that cost remains the primary variable that influences both the demand and supply in labor factor market. For instance, a firm will only hire a worker if the additional revenue generated from the move covers the additional cost. On the other hand, a worker will only provide labor to a firm where wages provided meet their expectations. Efficiency, task difficulties and job locations are other variables that influence demand and supply in the labor market.

What factor market deals with machines?

As aforementioned, a factor market is a marketplace for services of factor of production. Machines are integral part of production process and hence critical in factor market. In the production process, machines are referred to as capital goods and are instrumental in the production process. They are considered important as they help enhance a person’s power to perform economically useful work (Bernheim & Whinston, 2013).  Just like in labor factor, machines or capital goods are also affected by different variables that affect their demand and supply curves.  For instance, the cost of the machine will play a significant role in the demand and supply curve. Other factors will include technical expertise and skills as well as space will also be instrumental in shaping the demand and supply curve.

Refereces

AP-Microeconomics. (2012). Retrieved from http://www.mrrobinson.org/AP-Microeconomics.html

Bernheim, B. D., & Whinston, M. (2013). Equilibrium and Efficiency. In Microeconomics (2nd ed., p. 509).

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