Who is the demander of factor market? Why is the demand for production factors derived?

The demand of product market is completely different from that of factor market. In the product market, demand comes from consumers. Consumers buy products to directly meet their own needs for food, clothing, housing and transportation. So the demand for products is the so-called "direct" demand. Therefore, the demand of general products is determined by the marginal utility of products, which is called final demand. In contrast, in the factor market, demand comes not from consumers but from manufacturers. Factors of production cannot be directly used for consumption, nor can they have a direct effect on consumers. Manufacturers buy production factors not for their own direct needs, but for the production and sales of products, bringing benefits to manufacturers, and manufacturers have needs. For example, buying a machine can not directly improve someone's utility, but can only increase production capacity. Therefore, in this sense, the demand for production factors is not a direct demand, but an "indirect" demand. Furthermore, the production in which a manufacturer obtains benefits by purchasing factors of production depends in part on the demand of consumers for the products it produces. If there is no consumer demand for products, manufacturers will not benefit from producing and selling products, so they will not buy production materials and produce products. For example, if no one buys a car, manufacturers will not have the demand for auto workers; The demand for doctors and nurses is influenced by the demand for health care services. It can be seen that manufacturers' demand for production factors comes from consumers' direct demand for products. In this sense, western scholars believe that the demand of production factors is the so-called "derived" demand or "induced" demand. For example, consumers buy bread, which is a direct demand; The direct demand of consumers for bread leads bread manufacturers to buy production factors (such as flour and labor) to produce bread. Baker's demand for flour and labor comes from or derives from demand. For another example, textile machinery is needed by manufacturers because it can be used to produce textiles that consumers need. Derivative demand often has a series of links. In order to weave, cotton yarn, loom and weaving are needed, and in order to make a coat, cloth, sewing machine and tailor are needed.

The demand for factors of production is also characterized by the so-called "* * *", that is, the demand for factors of production is the same and interdependent. This feature is due to technical reasons, that is, factors of production often do not work alone. A man can't produce anything with his bare hands; Similarly, products cannot be created by machines alone. Only people and machines (and raw materials, etc.). ) can achieve their goals. This * * * same-sex feature of the demand for production factors has brought an important consequence, that is, the demand for a certain production factor depends not only on the price of that production factor, but also on the prices of other production factors. Therefore, strictly speaking, the theory of factors of production should be about the use of various factors of production. However, due to the simultaneous processing of multiple elements, the analysis will be too complicated. For the sake of simplicity, general western economics textbooks often focus on analyzing the situation of a production factor. (B) the demand curve of production factors

Just as consumers' demand for consumer goods is to obtain utility, manufacturers' demand for production factors is to obtain the productivity of factors. The consumer's demand for consumer goods depends on the marginal utility of consumer goods, while the manufacturer's demand for production factors depends on the marginal productivity of factors. Because the marginal productivity of factors of production tends to decrease, the demand curve of factors of production is a curve inclined to the lower right.

Under different market conditions, the demand curve of production factors is different. When the product market is completely competitive, the price is equal to the income, that is, P = Mr, MRP and VMP are the same curve. When the product market is not completely competitive, the marginal revenue is always less than the price because the product price and marginal revenue change in the opposite direction to the product quantity, Mr.

The supply of production factors refers to the quantity of production factors sold by the owners of production factors at a certain price in the market, which is the source of income for the owners of production factors. The supply price of production factors is the lowest price that the owner of production factors is willing to accept to provide a certain number of production factors.

We can regard the study of factor supply as starting from the maximization behavior of factor owners, and analyze how factor supply changes with the change of factor price. So, the first question to ask is: Who is the provider of elements? What is the maximization behavior of factor suppliers?

We know that in the theory of factor demand in western economics, factor users are "single", that is, producers or manufacturers, so their behavioral goals are also "single", that is, the pursuit of profit maximization. Back to the supply side, the problem is slightly more complicated: the factor owner can be both a producer and a consumer. Producers produce many "intermediate products" or "intermediate production factors", which will be put into the production process again, so they are the owners of intermediate factors, such as machinery and equipment, raw materials, factories and so on. Their supply price and quantity are mainly related to the cost of production and reproduction factors; Consumers, on the other hand, provide the market with "primitive factors of production" such as labor, so they are the owners of primitive factors such as labor, land and monetary capital, and their supply price and quantity are mainly determined by their inventory in a certain period, suppliers' preferences, opportunity costs and other factors. Because of the different identities of element owners, their behavior purposes are also different. According to the hypothesis of western scholars, the behavioral goals of producers and consumers are profit maximization and utility maximization respectively.

The inconsistency between factor owners and their behavioral goals will naturally affect the analysis of factor supply. The most important influence is that the principle of factor supply will certainly not be as consistent as the principle of factor demand, because different behavioral goals will lead to different behavioral principles, which will affect the methods, forms and even some conclusions of analysis. Therefore, theoretically speaking, the theory of factor supply must be divided into two parallel parts: the intermediate factor supply according to the behavior of maximizing producers' profits and the original factor supply according to the behavior of maximizing consumers' (or resource owners') utility.

However, in the first part of the above two parts, there is no difference between the supply of intermediate factors and the supply of general products, because the supply theory of general products has been discussed in detail in the product market, especially in the analysis of perfectly competitive product market. Therefore, the discussion of factor supply in this chapter can be completely limited to the extent that the owner of the factor is a consumer and his behavior is aimed at maximizing utility, that is, starting from the consumer's behavior of maximizing utility, establishing his factor supply and factors. Once confined to consumers, the factor supply problem has an obvious feature: the number of factors (referred to as resources) owned by consumers is always fixed in a certain period of time. For example, consumers only have 24 hours a day, and their possible labor supply cannot exceed this figure; For example, the land owned by consumers is also fixed, such as 2 hectares, so its possible land supply is only so much; For another example, a consumer's savings (that is, supply capital) cannot exceed the daily income of 500 yuan, and so on.