Factor
Categories: Banking, Company Management
Factors are the inputs firms need to make the stuff they’re selling, which includes labor.
Just like consumers have the consumer market, firms have their factor market. The main factors of production that firms need to make things are land, labor, capital, and raw materials.
Demand for flour in the factor market is, in part, derived from the demand for croissants in the consumer market.
The firm demand for battery engineers? It’s derived from consumer demand for longer-lasting batteries. Because having your phone die at the worst time is, well...the worst.
Demand for rubber on the rise by firms during the Baby Boom era? Maybe because the increase in supply of babies led to an increase in the demand for rubber duckies, which increased factor demand for rubber.
Or maybe firms were making something else with the rubber…hmmm…
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