Write a paper discussing factors of production. In a one-page (250-word) documen

Question

Write a paper discussing factors of production. In a one-page (250-word) document, address the following questions: How would you determine the demand for a factor of production? What factors influence the supply and demand for labor? Examine how those factors impact market demand for labor. How do labor unions try to increase the demand for labor? What has made labor unions such an integral part of the workforce? What is the difference between the rates of return for a renewable and nonrenewable resource? How do the rates of return on capital and land differ between a renewable and nonrenewable resource? How does the growing demand for food, fuel, and export affect the market for land?

Explanation / Answer

The various factors of production used in the process of production include- labor, Capital , Land and entrepreneurship. The demand of a factor of production is a derived demand determined by the demand of the final product for which the factor is used as an input. Increase in the demand of the final product will lead to increase in the demand of the factors of production.

Considering the case of labor, there are various factors which influence the demand and supply of labor, the common among them is the wage rate. As the wage rate increases, the demand for labor will decline because it will reduce the returns for the employers and as the wage rate decreases, the demand for labor will increase. The supply of labor is a positive function of the wage rate. Demand for labor is also affected by the demand of the final product manufactured using workers, it it increases the demand will increase. Supply of labor is also determined by the unemployment rate in the economy. As it increases, the supply will increase. In order to bargain for the labor rights and setting of higher wages for the workers, Labor union exists. A strong labor union helps in ensuring that workers are protected adequately in terms of higher wages, social security benefits, proper working conditions etc. Thus, it is an integral part of the workforce.

Considering the case of land market , land is generally a fixed factor of production and cannot be increased in the short run. Any increase in the demand of the final product like food, fuel, exports etc will not lead to increase in output in the short run but will only increase prices of these products. In the long run, though the supply of land can be increased or better technology may be used to increase production through efficient means.

Thus, supply and demand of various of production determines the prices of these factors.

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