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EC311 · Intermediate Microeconomics

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EC311 / TOPIC 36

9.1 Factor demand and economic rent

One idea · follow the reasoning · then practise1 / 9

01

How far should a firm hire an input, and how does economic rent differ from transfer earnings?

Workers flow into a factory connected with a coin balance, a handshake, gears, materials, and a computer
VISUAL NOTE · Factor markets Hire while marginal revenue product covers the wage

Hiring is worthwhile when extra revenue exceeds the wage, not merely when the worker makes more units.