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derived demand

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derived demand
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Business demand that ultimately comes from (derives from) the demand for consumer goods.
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marginal product
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The increase in output that arises from an additional unit of input
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marginal revenue product
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The addition to total revenue from selling the additional output from employing one more unit of a productive resource(input)
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marginal resource cost
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the change in total cost when an additional unit of a resource is hired, other things constant.
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substitution effect
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A firm will purchase more of an input whose relative price has declined and, conversely, use less of an input whose relative price has increased
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profit maximizing combination of resources
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The quantity of each resource a firm must employ to maximize its profit or minimize its loss: The combination in which the marginal revenue product of each resource is equal to its marginal resource cost.
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output effect
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The situation in which an increase in the price of one input will increase a firm’s production costs and reduce its level of output, thus reducing the demand for other inputs; conversely for a decrease in the price of the input.
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elasticity of resource demand
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A measure of the responsiveness of firms to a change in the price of a particular resource they employ or use; the percentage change in the quantity of the resource demanded divided by the percentage change in its price.
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least-cost combination of resources
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The quantity of each resource a firm must employ in order to produce a particular output at the lowest total cost; the combination at which the the ratio of the marginal product of a resource to its marginal resource cost is the same for the last dollar spent on each of the resources employed.
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marginal productivity theory of income distribution
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The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity