1. Markets
FACTOR

2. Write This Down
Factors Market
Factors Market - where factors of production are sold (labor = common example)

3. Factor Market Businesses sell Products Household buy Products
Up until now we have focused on the Product Market

4. Factor Market Businesses buy Labor Households sell Labor
Businesses sell
Products
Household buy
Products
Now we will learn about the Resource Market

5. Write This Down
Factors Market
Factors Market - where factors of production are sold (labor = common example)

6. Factors Market - where factors of production are sold (labor = common example)
SLabor
Quantity
(# of workers)
Labor Market
DLabor W Q
Wage
Supply of labor = #ppl who want the job
Demand of labor = #workers company wants to hire
Wages are determined by supply & demand of labor

7. 2 ways to interfere with wages:
Wages are determined by supply & demand of labor
2 ways to interfere with wages:
1. Government interference
Minimum wages cause unemployment
wages is an costs S
they can’t afford as many workers

8. Minimum Wage: a price floor on wages
Factor Market
Price Controls
Minimum Wage: a price floor on wages
SLabor
DLabor
Wage W1
Quantity of workers Q1
Minimum wage
(or Union Agreement) W2 Q2

9. Minimum Wage: a price floor on wages
Factor Market
Price Controls
Minimum Wage: a price floor on wages
Wage
SLabor W2
Minimum wage
(or Union Agreement) W1
DLabor Qd
< Qs
Quantity of workers
Firms want to hire less than the number who want to work

10. Minimum Wage: a price floor on wages
Factor Market
Price Controls
Minimum Wage: a price floor on wages
Wage
SLabor
Surplus W2
Minimum wage
(or Union Agreement) W1
DLabor Qd
< Qs
Quantity of workers
Surplus means firms are firing workers = unemployment

11. 2 ways to interfere with wages:
Wages are determined by supply & demand of labor
2 ways to interfere with wages:
1. Government interference
Minimum wages cause unemployment
wages is an costs S
they can’t afford as many workers
2. Union interference
Collective Bargaining – union officials
negotiate with employer
Strike – refusing to work
Picket – parade carrying signs
Boycott – mass refusal to buy products

12. Unemployment Types of Unemployment
Boycott – mass refusal to buy products
Unemployment
Definition – people available (want) to
work & looked for work, but didn’t find
work or worked less than 1hr for pay
Types of Unemployment
1. Cyclical – due to swings in business cycle

13. Normal Business Cycle

15. Unemployment Types of Unemployment
Boycott – mass refusal to buy products
Unemployment
Definition – people available (want) to
work & looked for work, but didn’t find
work or worked less than 1hr for pay
Types of Unemployment
1. Cyclical – due to swings in business cycle
2. Frictional - people inbetween jobs
(like changing jobs/waiting for new one to start)
3. Seasonal - caused by annual changes in
conditions like weather or holidays

16. Frictional Unemployment

17. Unemployment Types of Unemployment
Boycott – mass refusal to buy products
Unemployment
Definition – people available (want) to
work & looked for work, but didn’t find
work or worked less than 1hr for pay
Types of Unemployment
1. Cyclical – due to swings in business cycle
2. Frictional - people inbetween jobs
(like changing jobs/waiting for new one to start)
3. Seasonal - caused by annual changes in
conditions like weather or holidays

18. 2. Frictional - people inbetween jobs
(like changing jobs/waiting for new one to start)
3. Seasonal - caused by annual changes in
conditions like weather or holidays
4. Structural - caused by change in
economy that reduces demand for some workers – often from innovation in
technology. (like horses to cars)

20. 2. Frictional - people in between jobs
(like changing jobs/waiting for new one to start)
3. Seasonal - caused by annual changes in
conditions like weather or holidays
4. Structural - caused by change in
economy that reduces demand for some workers – often from innovation in
technology. (like horses to cars)
Anyone need more time?