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MARGINAL UTILITY AND DEMAND: An explanation of the law of demand and the negatively-sloped demand curve can be found in the analysis of marginal utility and especially the law of diminishing marginal utility. This explanation rests on two propositions. One, the law of diminishing marginal utility means that the marginal utility obtained from consuming a good declines as the quantity consumed increases. Two, the marginal utility of a good underlies the demand price that buyers are willing and able to pay for a good. When combined, these two propositions indicate that the demand price buyers are willing and able to pay for a good declines as the quantity demanded (and consumed) increases. And this is the law of demand.
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Lesson 21: Factor Demand | Unit 4: Determinants
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Page: 17 of 24
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- The ceteris paribus determinants of factor demand.
- Factor demand determinants are three ceteris paribus items that affect factor demand, but which are assumed constant when a factor demand curve is constructed. Changes in any one causes a shift of the factor demand curve.
- What are the factor demand determinants?
- Product Demand
- Factor Productivity
- Other Prices
- How do they affect the factor demand curve?
The factor demand curve, like any other curve, can shift in one of two ways: - An increase in factor demand is seen as a rightward shift of the factor demand curve.
- A decease in factor demand is seen as a leftward shift of the factor demand curve.
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LONG-RUN AGGREGATE SUPPLY CURVE A graphical representation of the long-run relation between real production and the price level, holding all ceteris paribus aggregate supply determinants constant. The long-run aggregate supply curve, abbreviated LRAS, is one of two curves that graphically capture the supply-side of the aggregate market. The other is the short-run aggregate supply curve. The demand-side of the aggregate market is occupied by the aggregate demand curve. The vertical long-run aggregate supply curve captures the independent relation between real production and the price level that exists in the long run.
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GRAY SKITTERY [What's This?]
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The 1909 Lincoln penny was the first U.S. coin with the likeness of a U.S. President.
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