forfactorinputs(微观经济学-华侨大学,jeffcaldw.pptVIP

Chapter 1 Chapter 14 Markets for Factor Inputs Topics to be Discussed Competitive Factor Markets Equilibrium in a Competitive Factor Market Factor Markets with Monopsony Power Factor Markets with Monopoly Power Competitive Factor Markets Characteristics 1) Large number of sellers of the factor of production 2) Large number of buyers of the factor of production 3) The buyers and sellers of the factor of production are price takers Competitive Factor Markets Demand for a Factor Input When Only One Input Is Variable Demand for factor inputs is a derived demand… derived from factor cost and output demand Competitive Factor Markets Assume Two inputs: Capital (K) and Labor (L) Cost of K is r and the cost of labor is w K is fixed and L is variable Competitive Factor Markets Problem How much labor to hire Competitive Factor Markets Measuring the Value of a Worker’s Output Marginal Revenue Product of Labor (MRPL) MRPL = (MPL)(MR) Competitive Factor Markets Assume perfect competition in the product market Then MR = P Competitive Factor Markets Question What will happen to the value of MRPL when more workers are hired? Marginal Revenue Product Competitive Factor Markets Choosing the profit-maximizing amount of labor If MRPL w (the marginal cost of hiring a worker): hire the worker If MRPL w: hire less labor If MRPL = w: profit maximizing amount of labor Hiring by a Firm in theLabor Market (with Capital Fixed) Competitive Factor Markets If the market supply of labor increased relative to demand (baby boomers or female entry), a surplus of labor would exist and the wage rate would fall. Question How would this impact the quantity demanded for labor? A Shift in the Supply of Labor Competitive Factor Markets Comparing Input and Output Markets Competitive Factor Markets Comparing Input and Output Markets In both markets, input and output choices occur where MR = MC MR from the sale of the output MC from the purchase of the input Competitive Factor Markets Scenario Produci