Explore BrainMass
Share

Explore BrainMass

    The demand for all goods and services

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    1. What does it mean to say that the demand for resources
    is a derived demand? Is the demand for all goods and
    services a derived demand?

    2. Using the information in the following table, calculate
    the marginal revenue product (MRP = MPP X MR).

    Units of Resource
    Resources Total Output Price Price
    1 10 $5 $10
    2 25 $5 $10
    3 35 $5 $10
    4 40 $5 $10
    5 40 $5 $10

    3. Using the data in exercise 2, determine how many units
    of resources the firm will want to acquire.

    4. Suppose the output price falls from $5 to $4 to $3 to $1
    in exercise 2. How would that change your answers to
    exercises 2 and 3?

    5. Using the data in exercise 2, calculate the marginal
    factor cost.

    6. Suppose the resource price rises from $10 to $12 to $14
    to $18 to $20 as resource units go from 1 to 5. How
    would that change your answer to exercise 5? How
    would it change your answer to exercise 3?

    © BrainMass Inc. brainmass.com October 10, 2019, 1:01 am ad1c9bdddf
    https://brainmass.com/economics/output-and-costs/demand-all-goods-services-317511

    Solution Preview

    1. What does it mean to say that the demand for resources is a derived demand? Is the demand for all goods and services a derived demand?

    Ans: The demand for resources (like labour or capital resources) is a derived demand as it is derived from the demand for the goods and services that it is used to produce. The quantities of factors of production demanded are a consequences of firms' output decisions. A firm hires the quantity of factor of production that maximize its profits.

    The demand for all goods and services is not a derived demand unless they are demanded for producing something else.

    2. Using the information in the following table, calculate
    the ...

    Solution Summary

    The demand for all goods and services is featured.

    $2.19