Monopsony

Economic rent

Above supply curve → excess over what is needed to pay for labour

Transfer earnings

Amount required to pay workers to work certain number of hours

What is MRP

Change in total rev for one unit change in a factor of production

What is MFC

Change in total cost for one unit change in a factor of production

What is MRPL?

MPL*MR

Or

MPL* P

MRP = VMP → for perfectly competitive market

Associated with demand

How do you get industry demand?

Sum all individual MRPL

What happens with labour union or minimum wage?

Labour supply exceeds demand → there will be involuntary unemployment

Monopsony - why is MC more steep?

Has to increase wage for all additional workers

What is a bilateral monopoly?

Trade union

If factor of production is rented?

MC = additional rent per period

MRP = additional revenue per period

If factor of production is purchased?

MC = cost of buying additional unit

MRP = extra revenue over whole life of the factor purchased, valued at time of purchase