# What is a factor demand function?

## What is a factor demand function?

A conditional factor demand function expresses the conditional factor demand as a function of the output level and the input costs. The conditional portion of this phrase refers to the fact that this function is conditional on a given level of output, so output is one argument of the function.

### How do you calculate conditional demand factor?

Conditional factor demand functions

- Optimal choices of factors are called the conditional factor demand functions. That is: L∗=L(w,r,q0) and K∗=K(w,r,q0)
- Optimal cost is the cost function. That is: c(w,r,q0)=wL(w,r,q0)+rK(w,r,q0)
- Notice: all this is in the “long run” because we are able to adjust all inputs.

**What is factor demand based on?**

The demand for a good depends on several factors, such as price of the good, perceived quality, advertising, income, confidence of consumers and changes in taste and fashion. We can look at either an individual demand curve or the total demand in the economy.

**How do you solve a Cobb-Douglas function?**

The formula for this form is: Q = f(L, K), in which labor and capital are the two factors of production with the greatest impact on the quantity of output.

## What are factor demand curves?

The factor demand curve indicates the quantity of a factor demanded at alternative factor prices. While all factors of production, or scarce resources, including labor, capital, land, and entrepreneurship, have factor demand curves, labor is the factor most often analyzed.

### What is W and R in production function?

w = wage rate. L = Quantity of Labor. r = price per unit of capital services. K = Quantity of Capital.

**What is rK in economics?**

That is, rK is the opportunity cost of the capital invested. If a firm uses only one variable input, L, then the firms earns pY – wL. If it is positive, the firm earns a surplus, equal to the accounting profit.

**What are the 4 factors of demand?**

Four factors that affect demand are price, buyers’ income level, consumer taste, and competition.

## What is alpha and beta in Cobb-Douglas production function?

Alpha is simply the percentage of capital I use in my production process, whilst beta is the percentage of labour used.

### What are the factors affecting demand?

Market Factors Affecting Demand

- Price of Product. The single-most impactful factor on a product’s demand is the price.
- Tastes and Preferences.
- Consumer’s Income.
- Availability of substitutes.
- Number of Consumers in the Market.
- Consumer’s Expectations.
- Elasticity vs.
- Anticipate Consumer Needs.