Like any other commodity, we can apply standard microeconomic theory to analyzing the demand for and supply of inputs. From that we can understand how markets for a variety of factors work and adjust to changes.

    Throughout this section we will use the terms factors, factors of production, and inputs interchangeably.

    On the other side we will use the terms goods and services, outputs, and products interchageably to refer to those things produced by factors of production.

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