Chapter 18 covers the Factors of Production.
The factors of production include
land: all natural resources necessary to create a good
labor: the effort people put into making the good
capital: assets invested in the firm by the firm for future production
One of the ideas you get out of this chapter is that in order to maximize profit
Firms hire workers up to the point where the value of the marginal product of labor equals the wage
If they don't then they are losing money and must lay off some workers to be profitable
A firm's decision to hire is based on the value of the marginal product
Profit maximizing firms will hire at a point where value of marginal product is equal to wages
Changes in one market of a factor of production affects the other factors involved in the firm
