Thus far we've determined where the demand curve for a factor comes from and what causes it to shift. All that remains is to examine those factors which affect the elasticity of factor demand curves. This is important because as we shall see in the section on Factor Prices, how elastic or inelastic the demeand curve for a factor is determines the relative strength of the effect of a supply shift on factor price and quantity hired.

    As always we will show more inelastic curves as steeper graphically. We will see that the elasticity of a factor demand curve can be affected both by Marginal Revenue and Marginal Product.

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