Baseball or Economics

In contrast, George Grumpinkston, an economics professor at the Ambling Institute of Technology, works longer and harder for twelve full months of the year. However, the educational service that he provides is not has highly valued. As such, his annual income is measured in thousands of dollars, rather than millions.

The demand for "Hair Doo" Dueterman's services is derived from the demand for the baseball entertainment that he helps to produce. The demand for Professor Grumpinkston's services is derived from the demand for the educational product that he helps to provide. Because economics education is less valued than baseball entertainment, the demand for Professor Grumpkinston's input is less valued than the demand for "Hair Doo" Dueterman's input.

Taco Demand Means Taco Workers

When the demand for Gargantuan Tacos is greater, then Waldo needs to employ more taco-producing workers. When the demand for Gargantuan Tacos is less then Waldo needs to employ fewer taco-producing workers. As a profit-maximizing producer, Waldo does not hire workers in his restaurant simply for the companionship. Rather, Waldo hires workers to make tacos. If there is no demand for tacos, then there is no demand for taco-making workers.

In particular, during the lunch hour Waldo's restaurant is bound to see a big demand for Super Deluxe TexMex Gargantuan Tacos and he is wise to have a large number of workers on the job to produced the tacos. Alternatively, mid-afternoon is just as likely to see a negligible demand for Gargantuan Tacos and Waldo is bound to have fewer workers.

Two Influences

• First, the productivity of the input, that is the marginal physical product. A more productive input, all things considered, is more highly demanded and tends to command a higher payment.


• Second, the demand for the output. An input that produces an output that is more highly valued, all things considered, is also more highly demanded and also tends to command a higher payment.