3. Non- Labor Costs Labor Costs PURELY COMPETITIVE LABOR MARKET EQUILIBRIUM Labor Market S D = MRP WcWc (1000) Individual Firm S = MRC d = mrp WcWc Quantity of Labor Wage Rate (dollars) Quantity of Labor ($10) (5) $10 Includes Normal Profit

4. Wage Rate (dollars) MRP S WmWm Quantity of Labor MRC QmQm MRP = MRC Q m units of labor hired MONOPSONISTIC LABOR MARKET

5. Wage Rate (dollars) MRP S WmWm Quantity of Labor MRC WcWc QmQm QcQc The competitive solution would result in a higher wage and greater Employment. MONOPSONISTIC LABOR MARKET

6. WuWu QuQu Wage Rate (dollars) D1D1 S Quantity of Labor WcWc QcQc D2D2...by increasing product demand Demand-Enhancement Model THREE UNION MODELS

7. WuWu Wage Rate (dollars) D Quantity of Labor WcWc QcQc Exclusive or Craft Model QuQu S1S1...restrictive membership policies...restricting labor supply of the economy as a whole …occupational licensing S2S2 THREE UNION MODELS

8. WuWu Wage Rate (dollars) D Quantity of Labor WcWc QcQc Inclusive or Industrial Model QuQu D...by organizing virtually all workers and thereby control of the supply curve for labor… S QeQe THREE UNION MODELS

9. Land Rent (dollars) D3D3 Acres of Land R1R1 S D4D4 D2D2 D1D1 R2R2 R3R3 0 DETERMINATION OF LAND RENT Changes in the demand for land... If demand is so low that there is no rent determined, land is said to be a free good, commanding no rent.

10. Unit IV: Study Chapters 14 Demand for Resources –(Summary pg. 274) 15 Wage Determination –(Summary pg. 296) 16 Rent, Interest, Profit –(Summary pg. 310)