factor markets Flashcards
what is MRPL
the extra amount of output produced when hiring one extra worker
what is the MRPL equation
P x MPL or MR x MPL
how does a firm determine weather to hire one more worker or not
MRPL > w - hire
MRPL < w - fire
MRPL = w - perfect
what is the profit maximization point using labour or output
p = w/MPL = MC
how do wages affect factor demand
lower wages leads to higher demand for labour
how does a fall in market price affect demand for labour
lowers demand for labour (inward shift of labour demand curve)
are MRPL and MPL steeper or shallower in the long run and why
shallower as in the LR capital is variable so there are now substitutes for labour should wages rise
what is the factor market demand curve the sum of
all individual firms factor demand curves
how does a fall in factor prices affect demand when price is not fixed
+usage of factors -> +output -> -market price -> -output and demand for inputs (factors)
what is the LR factor market supply curve
marginal cost curve above the minimum of its average cost curve
what is the MRPL equation for a monopoly
MR x MPL
p(1+1/e)MPL
what is a monopsony
when there is only one buyer of labour in a market
what is the equilibrium point for a monopsony in a factor market
ME = D
what is the marginal expenditure curve compared to the supply curve
what a monopsony is willing to pay compared to what it actually pays
