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Flashcards in Labour markets Deck (14)
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1
Q

what is the profit maximisation rule for hiring?

A

when MRPL = MRC

2
Q

How do you add a minimum wage?

A

you add a wage floor

3
Q

number of workers fired as a result of minimum wage

A

fall in demand from 100 to 50

50 workers fired

4
Q

number of workers who entered the industry, as a result of minimum wage

A

supply rose from 100 to 120

20 more workers entered

5
Q

number of unemployment as a result of minimum wage

A

surplus represents unemployment in the labour market

this case, 70 workers

6
Q

in a perfectly competitive labour market, each worker supplies their labour at the

A

wage set by the market (price takers due to perfect competition)

7
Q

in a perfectly competitive labour market

supply for labour=

A

marginal resource cost (MRC)

because the additional cost for each worker is constant

8
Q

in a perfectly competitive labour market

demand for labour

A

demand for labour is downward sloping as each additional worker generates less marginal revenue

demand = marginal revenue product (D=MRP)

9
Q

in a perfectly competitive labour market, hire workers when

A

MRC (marginal resource cost) = MRP (marginal resource product)

Hire workers as long as MRP>MRC

10
Q

what is marginal resource cost?

A

additional cost for each additional INPUT (worker)

11
Q

what is marginal revenue and cost?

A

additional cost for each additional output

additional revenue for each additional output

12
Q

in a perfectly competitive labour market, how many workers be hired by this firm?

given cost of each worker is 20

price of product is 10

0 workers = 0 output

1 worker = 5

2 workers = 12

3 workers = 16

4 workers = 17

5 workers = 15

A

hire qty workers that achieves MRP>MRC

here, 3 workers

13
Q

what does the supply and demand in resource market look like?

A
14
Q

if demand falls for the product being produced, what will change?

A

MRP (D) will decrease

as price for product falls