benjamin5_PPT_07

benjamin5_PPT_07 - Chapter 7-1 Chapter Seven Wages and...

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Unformatted text preview: Chapter 7-1 Chapter Seven Wages and Employment in a Single Labour Market Modified from Slides Created by: Erica Morrill Chapter 7-2 Chapter Focus Equilibrium in a single labour market Imperfect competition Payroll taxes Monopsony Minimum wage Chapter 7-3 Competitive Firm’s Demand Assumptions : homogeneous type of labour price taker and wage taker Supply is perfectly elastic (horizontal) at the wage rate Firms can employ all the labour they need at the market wage rate Market wage rate is set by the aggregate labour market Chapter 7-4 Figure 7.1 Competitive Product and Labour Markets W N Wc W N Wc W N Wc S W W N 1 N 1 N 2 N 2 Σ N i D= Σ D S 1 S 2 Firm 1 Firm 2 Aggregate Labour Marke Chapter 7-5 Short-Run A firm may have to raise its wages to attract additional workers (see Fig 7-2) Short-run labour supply curve is upward sloping Chapter 7-6 Figure 7.2 The Labour Market in the Short Run and Long Run Labour Wage D S S S 1 S’ S Supply of workers increase depressing the high short run wage D’ ↑ in demand leads to higher wages W S W c Chapter 7-7 Short-run and Long-run Labour Supply Long run Temporary wage increases above norm are consistent with the firm being a competitive buyer of labour. Wage then decreases as a result of increase in labour supply....
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benjamin5_PPT_07 - Chapter 7-1 Chapter Seven Wages and...

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