Agenda Collect HW Review/Overview Unions and Minimum Wage Stocks Research Reporting Former Students HW.

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Presentation transcript:

Agenda Collect HW Review/Overview Unions and Minimum Wage Stocks Research Reporting Former Students HW

Factors Market

Factors of Production Factors, Resources, Inputs – Land – Labor – Capital – Entrepreneurship

Cost Minimizing Combination of Resources at a Given Level of Output MPP/$ of Labor = MPP/$ of Capital – $ = MRC = Price (in perfectly competitive market) – Example MPP last unit of labor = 5Wage rate (MRC)= $10 MPP last unit of capital = 8 MRC = $16 Labor MPP/$ =.5Capital MPP/$ =.5

Optimal Combination (Profit Maximizing) of Resources at a Given Level of Output MRP/$ of Labor = MRP/$ of Capital – $ = MRC = Price (in perfectly competitive market) – Example MRP last unit of labor = $10Wage rate (MRC)= $10 MRP last unit of capital = $16 MRC = $16 Labor MRP/$ = Capital MRP/$ = 1

Perfectly Competitive Labor Market

Households = Supply Firms = Demand

Perfectly Competitive Market and Firm

Wage Elasticity- Labor Markets

Perfectly Competitive Market and Firm Supply = Marginal Resource Cost (MRC) Demand = Marginal Revenue Product (MRP) Profit-Max Q of Labor: MRP=MRC

Perfectly Competitive Firm MRP>MRC- hire more MRC>MRP- fire some

Monopolist Monopolist and Perfectly Competitive Labor Market

Labor Market Monopsony in Competitive Product Market *one buyer of labor (only one firm hiring)

Labor Market Monopsony Product Market Monopoly *one buyer of labor (only one firm hiring)

Minimum Wage in PC Labor Market?

Minimum Wage with Monopsony in Labor Market?

SANTA Ded Moroz Joulupukki Weihnachtsmann Pai Natal Babbo Natale

Minimum Wage Monopolist Minimum Wage Monopolist and Perfectly Competitive Labor Market

Unions Collective Bargaining _________ of workers Clayton Antirust Act (1914)

Unions in PC Labor Market?

Union and Monopolist Union and Monopolist and Perfectly Competitive Labor Market

Unions and Monopsonistic Labor Market?

Agenda FRQ return Land and Economic Rent FRQs – dos mas – De nada

Unions and Monopsonistic Labor Market Bilateral Monopoly – One buyer, One seller – Outcome is difficult to predict

Other Factors Labor = Wage Capital = Interest (that’s it until macro) Land = Rent Entrepreneurship- profit

Land

Economic Rent Term originally only applied to land Payment for land above price necessary for land to be made available A decrease in the payment for land will not reduce the quantity of land available for rent.

Economic Rent- modern Payment for any factor above price necessary for that factor to be employed A decrease in the payment for the factor will not reduce the available supply of the factor

Economic Rent- in other words Payment for/to any factor above the payment required by its owner

Human Capital Investment to improve skills and productivity of labor Self or Firm High wage jobs OFTEN include large human capital investments

From the Homework Petroleum Nuts and bolts Prize Horse

From the Homework Professors’ Salary and Marginal Productivity

From the Homework University Monopsony? Student Unions?