【正文】 2020 by Harcourt, Inc. Summary ? Workers earn different wages for many reasons. ? To some extent, wage differentials pensate workers for job attributes. ? Workers with more human capital get paid more than workers with less human capital. Harcourt, Inc. items and derived items copyright 169。2020 SouthWestern Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. AboveEquilibrium Wages: MinimumWage Laws, Unions, and Efficiency Wages ? Efficiency Wages ?The theory of efficiency wages holds that a firm can find it profitable to pay high wages because doing so increases the productivity of its workers. High wages may: ? reduce worker turnover. ? increase worker effort. ? raise the quality of workers that apply for jobs at the firm. Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. Table 1 Average Annual Earnings by Educational Attainment Copyright169。 2020 by Harcourt, Inc. The Markets for Land and Capital... Quantity of Land Quantity of Capital Q Q P P 0 0 Rental Price of Land Rental Price of Capital Demand Demand Supply Supply (a) The Market for Land (b) The Market for Capital Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. Graphical Review Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. Equilibrium in Markets for Land and Capital ?Each factor’s rental price must equal the value of their marginal product. ?They each earn the value of their marginal contribution to the production process. Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. Shifts in Labor Demand ?An increase in the demand for labor : ?Makes it profitable for firms to hire more workers. ?Puts upward pressure on wages. ?Raises the value of the marginal product. ?Gives a new equilibrium. Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. The Labor Supply Curve Supply Wage (price of labor) Quantity of Labor 0 Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. The Value of the Marginal Product of Labor ?The value of the marginal product is the marginal product of the input multiplied by the market price of the output. VMPL = MPL X P Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. The Versatility of Supply and Demand... (a) The Market for Apples (b) The Market for Apple Pickers Quantity of Apples Quantity of Apple Pickers Q L P W 0 0 Price of Apples Wage of Apple Pickers Demand Demand Supply Supply Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. Factors of Production Factors of production are the inputs used to produce goods and services. Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. The Production Function and The Marginal Product of Labor The marginal product of labor is the increase in the amount of output from an additional unit of labor. MPL = DQ/DL MPL = (Q2 – Q1)/(L2 – L1) Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. Input Demand and Output Supply When a petitive firm hires labor up to the point at which the value of the marginal product equals the wage, it also produces up to the point at which the price equals the marginal cost. Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. A Shift in Labor Supply... Wage (price of labor) W1 0 Quantity of Labor L1 Supply, S1 Demand 2. ...reduces the wage... 3. ...and raises employment. 1. An increase in labor supply... S2 W2 L2 Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. Prices of Land and Capital ?The purchase price is what a person pays to own a factor of production indefinitely. ?The rental price is what a person pays to use a factor of production for a limited period of time. Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. Summary ?The supply of labor arises from individuals’ tradeoff between work and leisure. ?An upwardsloping labor supply curve means that people respond to an increase in the wage by enjoying less leisure and working more hours. Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. Equilibrium in the Labor Market... Equilibrium employment, L Supply Wage (price of labor) Quantity of Labor 0 Demand Equilibrium wage, W Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. Compensating Differentials ? Compensating differential refers to a difference in wages that arises from nonmoary characteristics of different jobs. ?Coal miners are paid more than others with similar levels of education. ?Night shift workers are paid more than day shift workers. ?Professors are paid less than lawyers and doctors. Harcourt, Inc. items and derived items copyright 169。 2020 by Harcourt, Inc. The Superstar Phenomenon ? Superstars arise in markets that exhibit the following characteristics: ?Every customer in