1. The Markets for the Factors of Production18
The Markets for the Factors of Production

2. Figure 1 The Versatility of Supply and Demand
(a) The market for apples
(b) The market for apple pickers
Price of
Wage of
apples
apple
pickers
Supply
Demand
Demand
Supply P Q L W
Quantity of
Quantity of
apples
apple pickers
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3. Table 1 How the Competitive Firm Decides How Much Labour to Hire
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4. Figure 2 The Production Function
Quantity
of apples
Production
function
3000
2800
2400
1800
1000 1 2 3 4 5
Quantity of
apple pickers
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5. Figure 3 The Value of the Marginal Product of Labour
Value of marginal product
(demand curve for labour)
Market
wage
Profit-maximizing quantity
Quantity of
apple pickers
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6. Figure 4 Equilibrium in a Labour Market
Wage
(price of
labour)
Supply
Quantity of
labour
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7. Figure 4 Equilibrium in a Labour Market
Wage
(price of
labour)
Supply
Demand
Equilibrium
wage, W
employment, L
Quantity of
labour
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8. Figure 5 A Shift in Labour Supply
Wage
1. An increase in
labour supply . . .
(price of
Supply, S
labour)
Demand S W L
reduces
the wage . . . W L
Quantity of
and raises employment.
labour
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9. Figure 6 A Shift in Labour Demand
Wage
(price of
Supply
labour) D W L
Demand, D
1. An increase in
labour demand . . .
increases
the wage . . . W L
Quantity of
and increases employment.
labour
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10. Figure 7 UK Labour Productivity, 1961–2005 (1)
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11. Figure 7 UK Labour Productivity, 1961–2005 (2)
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12. Table 2 Annual Growth in UK Productivity, 1951–2000 (%)
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13. Figure 7 The Markets for Land and Capital
(a) The market for land
(b) The market for capital
Rental
Rental
price of
price of
Supply
land
capital
Supply
Demand
Demand P Q Q P
Quantity of
Quantity of
land
capital
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