Monopsony
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11 Terms
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
Note 
Flashcards (24)