Lectures in Microeconomics-Charles W. Upton Applying Labor Demand.

Slides:

Advertisements

Similar presentations

Labor Market. Demand For a Factor Demand for factors is a derived demand. If the demand for the product rises, the demand for the factors used to produce.

Advertisements

Prices and Output decisions for

Chapter 13: Aggregate Supply

Labor Demand in the market in the short run.

Lectures in Microeconomics-Charles W. Upton Properties of Cost Functions C = C(q,r,w)

Economic Analysis for Business Session XV: Market for Factors of Production Instructor Sandeep Basnyat

The Demand for Labor The Demand for Labor The demand for labor is a derived demand. Employer’s demand for labor is a function of the characteristics of.

Lectures in Microeconomics-Charles W. Upton Applying the Monopoly Model.

1 Immigration On page 168 the first full sentence is “Perhaps the key issue in the immigration debate is most receiving countries concerns the impact of.

Lectures in Macroeconomics- Charles W. Upton Short Run Labor Demand.

Lectures in Microeconomics-Charles W. Upton Applying Demand Functions.

Lectures in Microeconomics-Charles W. Upton Long Run Labor Demand.

Lectures in Microeconomics-Charles W. Upton Labor Demand.

1 Aggregate Supply: Short – Run & Long – Run. 2 Short-run Aggregate Supply Aggregate Supply (AS) shows the quantity of real GDP produced at different.

Chapter 15 - Resource markets. Economic Resources Resource Resource Payment land rent labor wages capital interest entrepreneurial ability profit.

Lectures in Microeconomics-Charles W. Upton Marginal and Average Cost.

Lectures in Microeconomics-Charles W. Upton Labor Monopoly and Monopsony.

Lectures in Macroeconomics- Charles W. Upton Labor Markets Overview.

The Demand for Labor. The Demand For Labor This lecture develops the model of labor demand.

Lectures in Microeconomics-Charles W. Upton The Basics of Competition MC = P.

Managerial Economics-Charles W. Upton Competition and Monopoly I A Problem.

Markets for Factor Inputs. Slide 2 Markets for factor inputs In some examination questions, one is asked to comment on factor market questions, such as.

Lectures in Microeconomics-Charles W. Upton Topics in Labor Supply and Demand.

Lecture 4: The Demand for Labor

Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. The Market for the Factors of Production The demand for a factor of production.

Chapter 3 The Demand for Labor. Copyright © 2003 by Pearson Education, Inc.3-2.

1 ATC AVC MC Relationship Between Average and Marginal Costs Costs per unit Quantity Q1Q1 B Q0Q0 A.

MARKET FOR FACTORS OF PRODUCTION

Lectures in Microeconomics-Charles W. Upton The General Production Function q = f(x 1,x 2,…,x n )

Lectures in Microeconomics-Charles W. Upton Changes in Factor Prices.

Lectures in Microeconomics-Charles W. Upton Solution to Three Competition Problems.

Lectures in Microeconomics-Charles W. Upton Labor Demand and Supply and Free Trade.

Lectures in Microeconomics-Charles W. Upton The Firm’s Supply Curve.

Changes in Factor Prices. Remember our basic cost function C = C(q,r,w)

Questions: (1) Where do the labor demand and supply curves come from? (2) How well do they explain the facts?

2.3 Real and nominal wages Actions of employers (buyers) and employees (sellers) determine wages (prices) These prices act as signals or incentives Part.

Ch 26: Factor Markets With Emphasis on the Labor Market Del Mar College John Daly ©2003 South-Western Publishing, A Division of Thomson Learning.

Factor Markets Land, Labor, Physical Capital & Human Capital

Input Demand: Labor and Land Markets

Lecture Notes: Econ 203 Introductory Microeconomics Lecture/Chapter 18: Markets for Factors of Production M. Cary Leahey Manhattan College Fall 2012.

Chapter 5-1 Chapter Five Demand for Labour in Competitive Labour Markets.

Chapter 3 Labor Demand McGraw-Hill/Irwin

Short-run & long-run increases in output Short run Input 1Input 2Output Long run Input 1Input 2Output

Unit 5: Factors of Production and their Market.

Chapter Thirty The Labor Market, Unemployment, and Inflation.

Short-run Production Function

Next page Chapter 5: The Demand for Labor. Jump to first page 1. Derived Demand for Labor.

Chapter 21.1 What is Supply?. An Introduction to Supply  Supply refers to the various quantities of a good or service that producers are willing to sell.

Supply and Demand. The Law of Demand The law of demand holds that other things equal, as the price of a good or service rises, its quantity demanded falls.

Factors Market $ Land (rent) $ Labor (wages), $ Capital (interest) $ Entrepreneurship (profit)

Activity 44 marginal revenue product How many workers should be hired?

Unemployment Chapter 7. 2 ©1999 South-Western College Publishing Figure 7.1 The supply of labor is a flow into the labor market. Stock of unemployed The.

Factors of Production Part II (Chapter 18). MRP sometimes call Value of Marginal Product ( VMP ) MRP If MB ≥ MC do it If MB < MC don’t Economic Decision.

Copyright © 2009 Pearson Education, Inc Topic 2. Chapters 3 & 4 The Demand for Labor.

1 Chapters , , 18.1, 18.2: Input & Labor Markets, Wages & Rent.

Market for Factors of Production Lecturer: Jack Wu.

Lesson 7-2 Aggregate Supply. Aggregate Supply: the Long Run and The Short Run Basic Definitions The short run in macroeconomic analysis is a period in.

The Economics of Labor Markets Chapter 18 Copyright © 2001 by Harcourt, Inc. All rights reserved. Requests for permission to make copies of any part of.

Chapter 9. THE MARKET FOR FACTORS OF PRODUCTION 1. Perfect markets Supply of Labour Demand for labour Distribution of Income when Markets are competitive.

MARKET FOR FACTORS OF PRODUCTION Lecturer: Jack Wu.

Derived demand is demand for resources (inputs) that is dependent on the demand for the outputs those resources can be used to produce. Inputs are demanded.

D1D1 The 4 shifts of the Supply and Demand Curve Shift 1- Demand Away D0D0 S 0 Price (P) Quantity (Q) P0P0 Q0Q0 P1P1 Q1Q1 4. ∆Q S; Movement along the S.

3 The Demand for Labor.

Competitive Factor Market

Short-run Production Function

Derivation of labor demand in a competitive product and labor market

3 The Demand for Labor.

Microeconomics Question #2.

© 1999 Michigan State University. All rights reserved.

EXHIBIT 11.1 An Overview of Aggregate Demand And Supply

Presentation transcript:

Lectures in Microeconomics-Charles W. Upton Applying Labor Demand

From Firm Demand to Market Demand w Q D1D1 wowo q1q1

Applying Labor Demand From Firm Demand to Market Demand w Q D2D2 D1D1 wowo q1q1 q2q2

Applying Labor Demand From Firm Demand to Market Demand w Q D2D2 D1D1 D m = D 1 +D 2 wowo q1q1 q2q2 q m =q 1 +q 2

Applying Labor Demand Applications Short Run Labor Demand

Applying Labor Demand Applications Short Run Labor Demand –A change in wage rates –A change in the price of the product

Applying Labor Demand Applications Short Run Labor Demand –A change in wage rates –A change in the price of the product Long Run Labor Demand

Applying Labor Demand Applications Short Run Labor Demand –A change in wage rates –A change in the price of the product Long Run Labor Demand –A change in wage rates –A change in the price of the product

Applying Labor Demand A Change in the Wage Rate- Short Run Labor Demand When the wage rate is w o, L o workers are demanded. wowo LoLo $ L

Applying Labor Demand A Change in the Wage Rate- Short Run Labor Demand When the wage rate is w o, L o workers are demanded. When the wage rate is w 1, L 1 workers are demanded. wowo LoLo $ L w1w1 L1L1

Applying Labor Demand A Change in the Wage Rate- Short Run Labor Demand When the wage rate is w o, L o workers are demanded. When the wage rate is w 1, L 1 workers are demanded. wowo LoLo $ L w1w1 L1L1

Applying Labor Demand A Change in the Wage Rate- Short Run Labor Demand When the wage rate is w o, L o workers are demanded. When the wage rate is w 1, L 1 workers are demanded. wowo w1w1 LoLo L1L1 In short, the lower the wage rate the greater the quantity of labor demanded

Applying Labor Demand A Change in the Product Price- Short Run Labor Demand When the wage rate is w o, L o workers are demanded. wowo LoLo $ L

Applying Labor Demand A Change in the Product Price- Short Run Labor Demand When the wage rate is w o, L o workers are demanded. If the price rises to P*, the VMP curve shifts up and to the right wowo LoLo $ L VMP = MPP x P*

Applying Labor Demand A Change in the Product Price- Short Run Labor Demand When the wage rate is w o, L o workers are demanded. If the price rises to P*, the VMP curve shifts up and to the right wowo LoLo $ L L1L1

Applying Labor Demand A Change in the Product Price- Short Run Labor Demand When the wage rate is w o, L o workers are demanded. If the price rises to P*, the VMP curve shifts up and to the right wowo LoLo $ L L1L1 The quantity of labor demanded increases to L 1

Applying Labor Demand A Change in the Product Price- Short Run Labor Demand When the wage rate is w o, L o workers are demanded. If the price rises to P*, the VMP curve shifts up and to the right wowo LoLo $ L L1L1 The quantity of labor demanded increases to L 1 The short run means no time to change capital stock

Applying Labor Demand A change in the Wage Rate-Long Run Labor Demand Change in Quantity of Labor Demanded = Substitution Effect + Scale Effect

Applying Labor Demand A change in the Wage Rate-Long Run Labor Demand Change in Quantity of Labor Demanded = Substitution Effect + Scale Effect A fall in the wage rate means increased quantity demand via the substitution effect.

Applying Labor Demand A change in the Wage Rate-Long Run Labor Demand Change in Quantity of Labor Demanded = Substitution Effect + Scale Effect A fall in the wage rate means increased quantity demand via the substitution effect. While the scale effect could be negative and theoretically reverse the substitution effect, it is unlikely.

Applying Labor Demand A Change in the Product Price- Long Run Labor Demand L K L* Let’s see what happens when in the long run when the price of a product changes. Initially the firm is employing L* workers.

Applying Labor Demand The Marginal Cost Curve L K L* MC Q* The Level of Operation is set by MC = P

Applying Labor Demand The Marginal Cost Curve L K L* MC Q* Q** The Level of Operation is set by MC = P When P rises, the level of output will increase

Applying Labor Demand Substitution Effect L K L* MC Q* Q** There is no substitution effect, but the scale effect is probably positive, so that the higher price probably leads to an increased demand.

Applying Labor Demand End ©2006 Charles W. Upton