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Introduction To Labor Markets: Chapter 3: Short-Run Labor Demand
Introduction To Labor Markets: Chapter 3: Short-Run Labor Demand
Introduction To Labor Markets: Chapter 3: Short-Run Labor Demand
Markets
where:
MRP
MRP = MR x MP,
where:
MRP
MRP = MR x MP,
where:
MRP
MRP = MR x MP,
where:
Alternatively:
Slope of MRP curve
MRP = MR x MP
Slope of MRP curve
MRP = MR x MP
law of diminishing returns
Slope of MRP curve
MRP = MR x MP
MR is constant if the output market is perfectly
competitive and decreasing if the output market is
imperfectly competitive.
Slope of MRP curve
MRP = MR x MP
Marginal factor cost
In a perfectly competitive labor market, MFC = w
Short-run labor demand in a
perfectly competitive labor market
Short-run labor demand in a
perfectly competitive labor market
Market labor demand curve
As noted earlier, the market demand
curve for labor is simply the horizontal
summation of all of the individual firms'
labor demand curves.
Monopsony
A monopsony occurs when there is a
single buyer of a good.
Monopsony
A monopsony occurs when there is a
single buyer of a good.
In the case of a labor market, a
monopsony occurs when only one firm
hires workers in a given labor market.
Supply curve facing a monopsonist
A monopsony firm faces the entire
market labor supply curve.
Supply curve facing a monopsonist
A monopsony firm faces the entire market labor
supply curve.
MFC > w
Wage and employment determination
under a monopsony labor market
Minimum wage (or union) in a
monopsony
Minimum wage (or union) in a
monopsony
Effects of a payroll tax in a perfectly
competitive labor market