Concepts
- Product Markets
- Outputs (Finished Products) are bought and sold
- Consumers Demand
- Producers Supply
- Factor Markets
- Inputs are bought and sold
- Factors of Production (Categories of Inputs/Resources)
- Land
- Labor
- Capital
- Entrepreneurship
- Roles of Supply and Demand Get Reversed
- Producers Demand
- Consumers Supply
Overview
One of the most important “big picture” concepts in Microeconomics is understanding the difference between product markets and factor markets. At this point, it might be hard to fully grasp this idea because it’s so early in the class, but I want to introduce it now so that as time goes on this blurry “big picture” concept will become more focused as we progress through the curriculum. Product markets are where OUTPUT/finished products are bought and sold. Consumers do the demanding and businesses do the supplying. Factor markets are where INPUTS to the production process are bought and sold. Businesses do the demanding and consumers do the supplying. It is important to emphasize how the roles of supply and demand get reversed as we look at product markets vs. factor markets.
Materials
Lectures
What are Economic Resources?
Resource (Factor) Markets
Quiz
No quiz on this lesson because there will not be any direct questions about this material on the AP Exam. However, these concepts are needed to understand other material that will be tested on the AP Exam so don’t overlook this lesson!!