In this chapter, you will learn to solve these economic puzzles: How do labor unions influence wages and employment? Does the NCAA exploit college athletes? What determines the wage rate an employer pays? Inviting you refer. | Chapter 11 Labor Markets Key Concepts Summary Practice Quiz Internet Exercises ©2000 South-Western College Publishing * In this chapter, you will learn to solve these economic puzzles: What determines the wage rate an employer pays? How do labor unions influence wages and employment? Does the NCAA exploit college athletes? * In a Perfectly Competitive Market, what determines the level of Wages? The intersection of the demand for labor and the supply of labor * D S Market Supply and Demand Wages Quantity of Labor * What does the Demand Curve for Labor show? The different quantities of labor employers are willing to hire at different wage rates in a given time period, ceteris paribus * 40 10 1 2 4 Production Function 30 20 5 50 6 3 60 Total Output Quantity of Labor Total Output * What is Marginal Revenue Product? The increase in total revenue to a firm resulting from hiring an additional unit of labor or other variable resource * 8 2 1 2 4 Marginal Product Curve 6 4 5 10 6 3 12 Marginal Product Quantity of Labor Law of Diminishing Returns * What is the Demand Curve for Labor equal to? It is equal to the marginal revenue product of labor * $280 $210 $140 $70 1 2 3 4 Demand Curve for Labor MRP = demand $350 5 Q * Decrease in Wage Rate Increase in Quantity of labor an employer will hire * How do we measure MRP in Perfect Competition? A perfectly competitive firm’s marginal revenue product is equal to the marginal product of its labor times the price of its product * What is Derived Demand? The demand for labor and other factors of production that depends on the consumer demand for final goods and services the factors produce * What does the Supply Curve for Labor show? The different quantities of labor workers are willing to offer employers at different wage rates in a given time period, ceteris paribus * $280 $210 $140 $70 10 20 30 40 Supply Curve of Labor $350 50 S D Quantity of Labor Wage Rate per day * . | Chapter 11 Labor Markets Key Concepts Summary Practice Quiz Internet Exercises ©2000 South-Western College Publishing * In this chapter, you will learn to solve these economic puzzles: What determines the wage rate an employer pays? How do labor unions influence wages and employment? Does the NCAA exploit college athletes? * In a Perfectly Competitive Market, what determines the level of Wages? The intersection of the demand for labor and the supply of labor * D S Market Supply and Demand Wages Quantity of Labor * What does the Demand Curve for Labor show? The different quantities of labor employers are willing to hire at different wage rates in a given time period, ceteris paribus * 40 10 1 2 4 Production Function 30 20 5 50 6 3 60 Total Output Quantity of Labor Total Output * What is Marginal Revenue Product? The increase in total revenue to a firm resulting from hiring an additional unit of labor or other variable resource * 8 2 1 2 4 Marginal Product .
