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.Continue Reading
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
In economics, land, labor, capital and entrepreneurship are known as the four factors of production. They are given this label because each plays a role in the production of business and industry that impacts the economic conditions in a society.Full Answer >
Some examples of capital goods, which are assets used to produce consumer goods and services, are machine tools, buildings, computers, baggage-handling systems, oil rigs and battleships. In the United States, the capital-goods sector is represented by companies such as Boeing, Caterpillar and Lockheed-Martin. Capital goods, such as conveyor belts, are used to produce consumer goods, such as candy bars.Full Answer >
Debatably, there are many different pros and cons to operating business under a mixed economic model, such as balance in markets and government interference. These pros and cons are the result of having an economy comprised of privately owned and publicly owned establishments. As the name implies, a mixed economy has its appeal as a blend of capitalism and socialism.Full Answer >
Market failure refers to the inefficient apportionment of goods and services by free markets, according to Wikipedia. Market failure is also used to describe situations in which there are no incentives for independent actors in a free market to seek maximum benefit for the whole society, notes David Pannell for the University of Western Australia.Full Answer >