ABSTRACT
In its 60-team roster, a National Football League franchise will pay a minimum rookie salary of $355,000 annually in 2012. If the rookie does not get hurt, with additional training, his salary can increase into the millions. In general, firms will employ inputs (factors of production) in the production of an outputwith the objective of maximizing profit. To determine the profit-maximizing level of an input, the associated cost per unit (implicit or explicit) of each input is required. In a free-market economy, this cost per unit is determined by the supply and demand for the inputs. For example, perfect competition in a factor market is characterized by the intersection of factor market supply and demand curves (Figure 16.1), where X is the total market quantity of an input (rookie football players) and v is the per-unit price. The intersection of the market supply and demand curves yields the equilibrium input price ve and quantity of the input Xe.
