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INDUCED CONSUMPTION: Household consumption expenditures that depend on income or production (especially disposable, national income, or gross national product). An increase in household disposable income triggers an increase in induced consumption expenditures. Induced consumption is graphically depicted as the slope of the consumption or propensity-to-consume line, and are measured by the marginal propensity to consume. The induced relation between income and consumption, as well as other induced expenditures, form the foundation of the multiplier effect triggered by changes in autonomous expenditures.

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MOBILITY:

The movement of factors of production from one productive activity to another. In particular, mobility is the ease with which resources can change production activities. Mobility generally takes one of two forms--geographic mobility (movement from place to place) and occupational mobility (movement from job to job). Mobility is a key determinant of factor supply.
Mobility is the ease of movement of resources between locations and/or between productive activities. Some factors are highly mobile and thus are easily switched. Other factors are highly immobile and not easily switched.

Mobility generally takes one of two forms--geographic mobility and occupational mobility.

  • Geographical mobility is the movement of factors from a productive activity in one location to a production activity in another location. For example, a worker leaves a job in one city and takes a job in another city.

  • Occupational mobility is the movement of factors from one type of productive activity to another type of productive activity. For example, a worker leaves a job as an accountant to take a job as a computer programmer.
Factor mobility is important as a factor supply determinant, and especially through the price elasticity of supply. Factors with greater mobility generally have greater elasticity and those with less mobility tend to have a lower elasticity. If factors can easily move between occupations and locations, then they can respond easily to higher and lower factor prices. Changes in mobility trigger shifts in the factor supply curve.

To illustrate mobility, consider the factors of production used by Hector Hamilton, a farmer residing on the outskirts of Shady Valley. Hector's key factors are farmland, capital equipment (especially a tractor and a big red barn), and assorted labor (including himself and a couple of hired hands). Hector also uses seeds, fertilizer, assorted chemicals, water, and electricity. How mobile are Hector's factors?

Geographic Mobility

Geographic mobility is the movement from one location to another.
  • Land: A key factor input used by Hector is land, especially farmland. Hector's farmland has virtually zero geographical mobility. It is where it is, on the outskirts of Shady Valley, and cannot be moved easily anywhere else. However, many of Hector's other land (material) inputs tend to have high geographic mobility. Seeds, fertilizer, chemicals, and electricity can be sent to almost anywhere in the country (or in the world for than matter). Water is a little less mobile, but it can be moved long distances at relatively low cost.

  • Capital: Hector uses an assortment of capital. Hector's tractor is relatively mobile. It can be loaded onto a truck and shipped to another state to engage in other farming pursuits. The mobility of Hector's big red barn falls between the farmland and the tractor. Unlike the land itself, the big red barn can be disassembled, loaded onto a truck, and reassembled to engage in other farming pursuits in another states. But such a task is significantly more involved than moving the tractor.

  • Labor: Hector's workers are relatively mobile, perhaps even more so than Hector's tractor. In particular, one of Hector's workers, Victor, is young, unmarried, has no family, rents a room over Hector's garage, and is independently wealthy. He could easily hop a freight train and seek employment in another state. Victor is quite mobile, geographically speaking.

    Hector's other worker, Becker, is little older, married to Hector's daughter, has three children in school, and is buying a parcel of farmland from Hector. Becker could leave for greener pastures in another state, but not nearly as easily as Victor. Becker is certainly more geographically mobile than the farmland and the big red barn, but probably less so than Hector's tractor.

  • Entrepreneurship: Hector, as the owner/entrepreneur of the farm, is likely the least geographically mobile of the human resource factors used in his farming production. Being a fifth generation owner who is rapidly approaching sixty, Hector has deep ties to his farmland, to the community, and his established way of live. While he is physically able to relocate to another state, he is emotionally unwilling to do so.

Occupational Mobility

How do Hector's factors measure up in terms of occupational mobility?
  • Land: While farmland has very little geographic mobility, it has relatively good occupational mobility. Hector could easily use his land to plant a wide range of crops. Or the land could be used to build a shopping mall or construct a factory. It could be flooded to create a recreational lake or be turned into a wildlife preserve. It could be used as the site of an amusement park or a drive-in movie. Hector's land is extremely mobile when it comes to changing production activities.

    Some of Hector's other land (material) inputs have very little occupational mobility while others have extremely high occupational mobility. Water and electricity are obviously two inputs that can be used in almost any production activity, with correspondingly high occupational mobility. Seeds, in contrast, are designed to grow specific crops and have very limited occupational mobility. Fertilizers and chemicals, which could be used for different crops and have limited non-farming uses, are slightly more occupationally mobile that seeds, but clearly not nearly as much as electricity and water.

  • Capital: Hector's capital is somewhat less occupationally mobile. The big red barn could, of course, be used in the production of a wide range of crops, but beyond farming the mobility lessens. It could be converted into living quarters, used as a tourist center for wildlife preserve somewhat, or become the haunted house in the amusement park. Hector's tractor is also quite mobile between crops and it could be easily used to assist in other productive activities, perhaps as an amusement park ride.

  • Labor: Hector's workers have varying degrees of occupational mobility. Being young, single, and independently wealthy, Victor is quite mobile between occupations. Victor could easily operate an amusement park ride, run a drive-in movie concession stand, or spend four years getting a degree in wildlife management.

    Becker's occupational mobility is somewhat less than Victor. Becker could leave farming and pursue another occupation, but his marriage to Hector's daughter and other ties to farming limit his occupational mobility.

  • Entrepreneurship: Hector is probably the least occupationally mobile of the three human resources. He is a farmer, he has been a farmer, he is not likely to leave farming to sell popcorn at a drive-in movie or operate the roller coaster ride at an amusement park.

<= MIXED ECONOMYMODEL =>


Recommended Citation:

MOBILITY, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2018. [Accessed: October 15, 2018].


Check Out These Related Terms...

     | geographic mobility | occupational mobility | factor supply curve | factor supply determinants | supply to a firm | supply by a firm |


Or For A Little Background...

     | factor supply | factors of production | factor market analysis | marginal factor cost | market supply | price elasticity of supply |


And For Further Study...

     | marginal revenue product | marginal physical product | factor demand | monopsony | bilateral monopoly | oligopsony | monopsonistic competition | market structures |


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