quite mobile between but less mobile between
e. In general, the demand by most firms for factors of
production is small relative to demand in the economy as
a whole. So, the supply curve for factors faced by any
individual firm is almost perfectly.
f. The total supplies of land, labour, and capital to the
economy change gradually over time, often in response to
forces.
4. Fill in the blanks to make the following statements correct.
a. Mobility of factors leads to the elimination of temporary
in factor prices.
b. Factor-price differentials that persist and do not generate
any eliminating forces are known as differentials.
c. Farmland that is fertile and has a natural supply of water
will be more expensive than rocky, arid land. This
difference in price is an example of a(n) differential,
and we say the difference is , as opposed to acquired.
d. A geological engineer that analyzes drill samples is paid
more than a drilling operator. This difference in factor
prices is an example of a(n) differential, and we say
the difference is likely a(n) difference due to formal
education and training.
e. The concept of transfer earnings is similar to the concept
of cost. It is the amount that a factor must earn to
prevent it from to another use.
f. Any amount that a factor earns above its transfer earnings
is called.
