SHIFTS IN LABOR SUPPLY

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SHIFTS IN LABOR SUPPLY Suppose that immigration increases the number of workers willing to pick apples. As Figure 5 shows, the supply of labor shifts to the right from SI to S2. At the initial wage WI’ the quantity of labor supplied now exceeds the quantity demanded. This surplus of labor puts downward pressure on the wage […]

EQUILIBRIUM IN THE LAB0R MARKET

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EQUILIBRIUM IN THE LABOR MARKET So far we have established two facts about how wages are determined in competitive labor markets: • The wage adjusts to balance the supply and demand for labor.] • The wage equals the value of the marginal product of labor. At first, it might seem surprising that the wage can […]

WHAT CAUSES THE LABOR SUPPLY CURVE TO SHIFT?

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WHAT CAUSES THE LABOR SUPPLY CURVE TO SHIFT? The labor-supply curve shifts whenever people change the amount they want to work at a given wage. Let’s now consider some of the events that might cause such a shift. Changes in Tastes In 1950, 34 percent of women were employed at paid jobs or looking for work. […]

THE TRADE OFF BETWEEN WORK AND LEISURE

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THE TRADE OFF BETWEEN WORK AND LEISURE One of the Ten Principles of Economics in Chapter 1 is that people face trade offs. Probably n&trade off is more obvious or more important in a person’s life than the trace-off  work and leisure. The more hours you spend working, the fewer hours you have to watch T V,enjoy […]

THE SUPPLY OF LABOR

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THE SUPPLY OF LABOR Having analyzed labor demand in detail, let’s turn to the other side of the market and consider labor supply. A formal model of labor supply is included in Chapter 21, where we develop the theory of household decision making. Here we discuss briefly and informally the decisions that lie behind the labor supply curve. […]

WHAT CAUSES THE LABOR DEMAND CURVE TO SHIFT?

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WHAT CAUSES THE LABOR DEMAND CURVE TO SHIFT? We now understand the labor-demand curve: It reflects the value of the marginal product of labor. With this insight in mind, let’s consider a few of the things that might cause the labor-demand curve to shift. The Output Price The value of the marginal product is marginal product […]

THE VALUE OF THE MARGINAL PRODUCT AND THE DEMAND FOR lABOR

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THE VALUE OF THE MARGINAL PRODUCT AND THE DEMAND FOR lABOR Our profit-maximizing firm is concerned more with money than with apples. As a result, when deciding how many workers to hire, the firm considers how much profit each worker would bring in. Because profit is total revenue minus total cost, the profit from an additional worker […]

THE PRODUCTION FUNCTION AND THE MARGINAL PRODUCT OF lABOR

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THE PRODUCTION FUNCTION AND THE MARGINAL PRODUCT OF lABOR To make its hiring decision, the firm must consider how the size of its work force affects the amount of output produced. In other words, it must consider how the number of apple pickers affects the quantity of apples it can harvest and sell. Table I gives a […]

THE COMPETITIVE PROFIT MAXIIMIZING FIRM

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THE COMPETITIVE PROFIT MAXIIMIZING FIRM Let’s look at how a typical firm, such as an apple producer, decides the quantity of labor to demand. The firm owns an apple orchard and each week must decide how many apple pickers to hire to harvest its crop. After the firm makes its hiring decision, the workers pick as many […]