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final test reviewe

final test reviewe - Economics Chapter 11 Labor...

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Economics Chapter 11 – Labor Markets -product markets- where firms sell goods/ services to households -factor market- when labor, capital and land are sold to firms Assumptions in labor market- 1-great # buyers and sellers (no 1 company can affect market) 2-all workers look same to company 3-easy entry exit (takes time but relatively easy) MRP Change TR rise total revenue/ unit MFC- change Tc rise in total cost/ unit Change Q (labor this time) change Q MP of labor- - change Q Change in labor Goes up first and then goes down b/c law diminishing marginal returns Hire amount when MRP = MFC- MRP downward sloping curve b/c when wage decrase hire more ppl Change in wage rate- movement along the demand and supply curve for labor Demand curve shift 1-change price of product- high price more produce increase workers 2- price complementary output 3- price subst output
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4- number firms- increase shift righg 5- technology- both sub and complementary Changes in supply- entire curve shifts Changes in demand- move along the curve Shift Supply Labor Curve 1- wage in other markets 2-changes in # qualified workers 3- changes in taste LRSC- after which all adjustments have been made- very elastic MW- leads to discrimination- some get wage the supply is higher than demand- will pay more for skilled workers in the long run over unskilled workers Chapter 12- Economic Inequality -why observe economic wage differences b/c 1- all occupations equally attractive 2- workers equally able 3-market perfectly competitive (free and easy entry and exit) -Unions- increase wage- so some workers get higher wage but many get fired- increase cost- market pays- surplus laborers- move to more skilled workers or new technology -Poverty level- 3 x food expenditures
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