Q:

What are some examples of factor markets?

A:

Quick Answer

Three primary examples of factor markets are labor, land and capital. These factors are required to produce a good or service and can be broken down into smaller individual factors, such as the various natural resources that are derived from the overall factor market of land. Labor can also be divided into the factor markets of unskilled labor, skilled labor and the entrepreneurial skills needed to staff and launch the firms that will produce a good or service.

Know More

Full Answer

The required factors of production are purchased by the producer companies in the factor markets. Almost all of the resources and services required for production can be considered part of the factor market when they are traded for during the production process. The basic unit of trade within the factor market of labor is the wage rate. In addition to production resources such as water, natural gas and minerals, capital is a much-needed production resource for which the unit of trade is the interest rate charged by lenders.

Factor markets are affected by the same dynamics as the markets for the produced goods for which they are required. As the demand curve and price elasticity of the finished product alters its demand and market price, the factor markets required for that product are also affected. The interaction between production markets and their associated factor markets reflects the economic principle of derived demand.

Learn more about Economics

Related Questions

  • Q:

    What is the definition of net factor income from abroad?

    A:

    Net factor income from abroad is the amount of money made in a country other than one's legal home country, according to Investopedia. This term applies to income made by either an individual or a business and refers to income made abroad that is then sent back to the home country. This income can come in the form of wages or investments.

    Full Answer >
    Filed Under:
  • Q:

    How do you define free labor ideology?

    A:

    The definition of free labor ideology is the belief that labor should result in independence and wealth distribution. Free labor ideology is a term used to refer to the differences between the Northern and Southern economies during the nineteenth century. A common misconception is that free labor ideology refers to the economy of the South at that time. However, the term refers to the economic opportunities in the North during that period.

    Full Answer >
    Filed Under:
  • Q:

    What are the causes of labor unrest?

    A:

    Although many conditions can lead to labor unrest, the most common are poor and dangerous working conditions, unfair pay for the labor provided and income inequality among workers. American labor unrest in the late-19th and early-20th century came from a shift in socioeconomic status among laborers.

    Full Answer >
    Filed Under:
  • Q:

    How is the labor force participation rate calculated?

    A:

    The labor force participation rate is calculated by adding the number of the noninstitutionalized and nonactive military duty population between the ages of 16 and 64 who are employed or who are looking for work. The United States Department of Labor's Bureau of Labor Statistics (BLS) bases the labor force participation rate on Census Bureau population projections.

    Full Answer >
    Filed Under:

Explore