In this section of the course, you will apply the concepts of supply and demand to markets for factors such as labor, capital, and land, as well as to product markets. You will analyze the concept of derived demand, understand how a factor’s marginal product and the marginal revenue of the product affect the demand for the factor, and consider the role of factor prices in the allocation of scarce resources. When the markets for different factors are considered separately, we shall pay close attention to the labor market, particularly labor supply and wage and employment determination. Although we shall emphasize perfectly competitive labor markets, the effect of deviations from perfect competition, such as minimum wages, unions, monopsony, and product market monopolies, will also be considered. For the factors of land and capital, you will examine the concept of economic rent and the relationship of the interest rate to the supply and demand for investment funds. By studying the determination of factor prices, you will gain an understanding of how the market determines the distribution of income and the sources of income inequality in a market economy.
The Essential Questions
- Explain the concept of derived demand.
- Calculate and explain the quantity of labor or a resource to be hired/bought by a firm.
- Construct a short-run demand schedule for a resource.
- Calculate and explain the relative amounts or proportions a producer should acquire of two or more resources.
- Explain the relationship between MP and the demand for an input.
- Explain and apply the concept of least-cost combination of inputs to novel data.
- Explain and apply the rule for finding least-cost combination.
- Explain how the marginal productivity theory of resource demand applies to wage rate determination.
- Explain how the wage rate is determined.
- Calculate and determine wage rates in a competitive labor market and in a monopolistic labor market.
Lessons
5.1-_supply_and_demand_for_resources.ppt | |
File Size: | 2314 kb |
File Type: | ppt |
5.3-_mrp_mrc_and_hiring_workers.ppt | |
File Size: | 3344 kb |
File Type: | ppt |
5.4-_monopsony_and_unions.ppt | |
File Size: | 954 kb |
File Type: | ppt |