Factor markets ap micro

what does minimum wage do?

price floor, Qs increases, Qd decreases, unemployment is caused by surplus of workers

MRC equation

change in total cost/change in inputs

MRC

the additional cost when you add another worker

MRC in perfect comp

equals the wage set by the market and is constant

MRP

the additional revenue gained when another worker is added

MRP equation

change in total revenue/ change in inputsRPM

MRP in perfect comp

equals the marginal product times the price

Misleading job information

prevents workers from seeking better employment

geographical immobility

people are unable to move so they accept lower wages

Wage discrimination

not paying equally based on gender, race, etc

Unions

threats to strike and bargaining cause higher equilibrium wages

shifts for demand in labor

price of output, productivity of worker, change in price of other resources

derived demand

the demand for a product is determined by quality of product produced

shifters to supply

education, availability of alternative options, immigration and mobility of workers, cultural expectations, working conditions, preferences for leisure

how to know how many workers to hire

MRP = MRC