Microeconomics: Factor Market Concepts

These flashcards cover key vocabulary and concepts related to factor markets in microeconomics, including monopsony, labor demand, and profit maximization.

Monopsony

A market structure where there is only one buyer for a good or service in a given market.

Marginal Revenue Product of Labor (MRPL)

The additional revenue generated from hiring one more unit of labor calculated as MR × MPL.

Competitive Factor Market

A market structure characterized by many small buyers and sellers where no single buyer or seller can influence the market price.

Wage

The price paid to labor for services, often denoted as 'w' in economic equations.

Short-Run Factor Demand

A firm's demand for labor or other inputs when at least one factor of production is fixed.

Marginal Product of Labor (MPL)

The additional output produced by employing one more unit of labor.

Profit-Maximizing Condition

The point at which the marginal cost of employing labor equals the marginal revenue product of labor.

Labor Demand Curve

A curve that shows the relationship between the quantity of labor demanded by firms and the wage rate.

Market Equilibrium

The point at which the demand for labor equals the supply of labor.

Long-Run Factor Demand

A firm's demand for factors of production when all inputs can be varied.