In factor markets,

Question

In factor markets,

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In factor markets, firms are the demanders as they seek to acquire labor, capital, and other factors of production to use in their production process. This is in contrast to product markets where individual consumers are the demanders. Equilibrium can be defined in factor markets with the intersection of the supply and demand curves for factors of production. The market may have an excess supply or an excess demand depending on the relative bargaining power of buyers and sellers. Labor and capital are not necessarily viewed as perfect substitutes by firms, as they may have different skills or characteristics that are better suited for certain tasks.

In Factor Markets