Factor Markets: The market for stuff that makes stuff. (Land, Labor and Capital)2011Final Project- power point2012 Final ProjectEssential Questions
In what sense is demand for labor “derived” demand?
What is the relationship between a firm’s marginal revenue product curve and it’s demand for labor?
What are the key factors that influence elasticity of demand for inputs?
Marginal Physical Product of Labor (MPP)
Marginal Revenue Product (MRP)= price of firms output* MPP
Marginal Revenue Cost (MRC)= Change in total cost/change in amount of resource used
Firm will keep hiring until additional cost of hiring last worker = additional revenue made by that worker
In a competitive labor market Derived Demand Curve for labor is downward sloping
Price Elasticity of Demand for Inputs will be greater based on
- The greater the price elasticity of demand
- The # of substitutes for input
- The larger proportion of total cost of that input
- The longer period of time being considered
Long- Run Demand for labor is negatively sloped
- Substitution Effect- Increased wages leads to an increase in demand for innovation
- Output Effect- Increased wages lead to decreased output
- Laborers supply labor
- Firms Demand Labor
- Efficiency Wages- set above equilibrium
- Hiring “ Insiders”
Reasons for Shifts in Demand
- Change in demand for final product – auto industry
- Change in Labor Productivity
- Change in price of substitutes and compliments
Determinants for supply of labor
- Wages in other industries
- Changes in working conditions
- Job flexibility
A Monopolists input demand curve
- Monopolies hire less workers
Derived demand for land, labor and capital leads to cost minimization
- Outsourcing American Jobs
- Investment in Technology
Is this sort of creative destruction good for America?
Former AP FRQ Questions
http://www.careeronestop.org/ExploreCareers/Occupations/OccupationsWhatsHot.aspx- Jobs in High Demand
http://www.careeronestop.org/ExploreCareers/Occupations/OccupationsWhatsHot.aspx- CNBC's 2011 best jobs list
http://www.econedlink.org/lessons/index.php?lid=951&type=educator- The lost derived demand in Cleveland when NBA star Lebron James decided to play for the Miami Heat.
2011 (Form B) #3
2010 (Form B) #2