Microeconomics - Labor Markets

What is Demand for Labor

The inverse relationship between the wage and the quantity of labor

Demand for Labor Equation

W = P * MPL

What is Marginal Product?

how much extra can you make

Marginal Revenue Product =

the value of how much you can make (P*MPL, aka wage)

If MR > MC, firms will keep...

Hiring

Using the Demand for Labor Equation, What's MC

W/MPL

Using the Demand for Labor Equation, What's MR

P*MPL

What's Labor Productivity

how much a worker can produce per unit of time

What will cause a worker to work less and "leisure" more?

Higher opportunity costs of leisure

What are real wages?

Adjusted for Inflation

When will an employee accept a lower wage and non-monetary benefits?

When the value of the non-monetary benefit is greater than the cost of that non-monetary benefit

What are the two definitions of a monopsony?

1) Corp is so big it can negotiate the prices it's willing to pay (i.e. health insurance)
2) Corp is the only consumer of labor

In a monopsony, is the supply curve always above or below the marginal cost curve?

below

If a change in opportunity cost causes a shift in supply, what will happen with the demand curve?

the point will move along the pre-existing demand curve

When workers work less, what must the supply curve do?

Shift left

What is the value of Marginal Product of Labor

MPL * Price

What does labor-augmenting tech do?

increase productivity, so we'll want to hire more workers