Micro Economic Chapter 29 Study Guide

Micro Economic Chapter 29 Study Guide - Chapter 29: What do...

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Chapter 29: What do you understand as pure competition in hiring of factors of production? - A firm that hires labor under perfectly competitive conditions hires only a minuscule proportion of all the workers who are potentially available to the firm. Potentially available : all workers in a given geographical area who possess the skills demanded by our perfect competitor - In such a market, it’s always possible for the individual firm to hire extra workers without having to offer a higher wage - Supply of labor to the firm is perfectly elastic at the going wage rate established by the forces of supply and demand in the entire labor market How would you graph this situation? Horizontal supply curve at the constant wage rate (MFC=S) How come this line is horizontal? All workers are hired at the same wage How is the MRP curve calculated? How could you derive this curve change in TR and MPP times price of output What does it represent? Why? D for labor What is the reason why the MPP and MPR are downward sloping? Hiring one more unit of labor causes the MPP to decrease At what point will the firm maximize profits in hiring of resources (labor)? MFC=MRP How would you calculate the total profit from a number of workers hired and the wage that they are being paid? -
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Micro Economic Chapter 29 Study Guide - Chapter 29: What do...

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