Question

How would you determine the demand for a factor of production? What factors influence the supply and demand for labor? Examine how those factors impact market demand for labor. How do labor unions try to increase the demand for labor? What has made labor unions such an integral part of the workforce? What is the difference between the rates of return for a renewable and nonrenewable resource? How do the rates of return on capital and land differ between a renewable and nonrenewable resource? How does the growing demand for food, fuel, and export affect the market for land?

Answer 1

Its a partial answer. Hope it helps

The demand for factors is a derived demand. This is because the demand for a factor of production (input) is derived from the demand of output. If the demand of output is high, then the demand for input or factor of production would also be high and vice versa.

According to the modern theory, the demand for a factor of production depends on two parameters, which are explained as follows:

1. Magnitude of demand for a factor: Involves three conditions, which are as follows:
   1. Condition 1:Implies that there would be high demand for a factor of production if it is highly important in the production process.
   2. Condition 2: Implies that there would be high demand for a factor of production if the demand for output or final product is high.
   3. Condition 3: Implies that there would be low demand for a factor of production if it has close substitutes.
2. Elasticity of demand for a factor: Refers to the responsiveness of demand for a factor with change in its price.​​​​​​ The elasticity of demand for a factor also depends on three conditions, which are as follows:
   1. Condition 1: Implies that if the price of a factor is very low with respect to the total cost, then the demand for that factor will be inelastic and vice versa.
   2. Condition 2: Implies that if the demand for the product for which the factor of production is used is elastic, then the demand for the factor used would also be elastic.
   3. Condition 3: Implies that if the factor of production has easy availability of substitutes in the market, then its demand would be highly elastic.