【正文】 When the wage rate falls to $15, the MRP curve shifts, generating a new point C on the firm’s demand for labor curve. Thus A and C are on the demand for labor curve, but B is not. DL A B C 169。2020 Pearson Education, Inc. Chapter 14 19 Factor Input Demand – Many Inputs ?If the wage rate falls: ?More labor will be demanded even if amount of machinery does not change ?MC of producing farm equipment falls ?Profitable for firm to increase output ?Will invest in additional machinery to expand production ?MRPL will shift right, quantity of labor demanded increases 169。2020 Pearson Education, Inc. Chapter 14 17 Factor Input Demand – One Variable Input ?Both the hiring and output choices of the firm follow the same rule ?Inputs or outputs are chosen so that marginal revenue from the sale of output is equal to marginal cost from the purchase of inputs ?True for both petitive and nonpetitive markets 169。2020 Pearson Education, Inc. Chapter 14 15 A Shift in the Supply of Labor Quantity of Labor Price of Labor w1 S1 MRPL = DL L1 L2 w2 S2 169。2020 Pearson Education, Inc. Chapter 14 13 SL In a petitive labor market, a firm faces a perfectly elastic supply of labor and can hire as many workers as it wants at w*. Hiring by a Firm in the Labor Market Quantity of Labor Price of Labor MRPL = DL w* L* The profit maximizing firm will hire L* units of labor at the point where the marginal revenue product of labor is equal to the wage rate. 169。2020 Pearson Education, Inc. Chapter 14 11 Marginal Revenue Product Hours of Work Wages ($ per hour) MRPL = MPLx P Competitive Output Market (P = MR) MRPL = MPL x MR Monopolistic Output Market (P MR) 169。2020 Pearson Education, Inc. Chapter 14 9 Factor Input Demand – One Variable Input ))(( MRMPM R PLRLRQRMRLQMPLRM R PLLLL???????????????????????andla b o r is L and r e v e n u e is R w h e r e169。2020 Pearson Education, Inc. Chapter 14 7 Factor Input Demand – One Variable Input ?The incremental cost of a unit of labor is the wage rate, w ?Profitable to hire more labor if the MRPL is at least as large as the wage rate, w ?Must measure the MRPL 169。2020 Pearson Education, Inc. Chapter 14 5 Factor Input Demand – One Variable Input ?Assume firm produces output using two inputs: ?Capital (K) and Labor (L) ?Hired at prices r (rental cost of capital) and w (wage rate) ?K is fixed (short run analysis) and L is variable ?Firm must decide how much labor to hire 169。2020 Pearson Education, Inc. Chapter 14 3 Competitive Factor Markets ? Characteristics 1. Large number of sellers of the factor of production 2. Large number of buyers of the factor of production 3. The buyers and sellers of the factor of production are price takers 169。Chapter 14 Markets for Factor Inputs 169。2020 Pearson Education, Inc. Chapter 14 2 Topics to be Discussed ?Competitive Factor Markets ?Equilibrium in a Competitive Factor Market ?Factor Markets with Monopsony Power ?Factor Markets with Monopoly Power 169。2020 Pearson Education, Inc. Chapter 14 4 Competitive Factor Markets ?Demand for a factor input when only one input is variable: ?Factor demands are derived demand ? Demand for an input that depends on, and is derived from, both the firm’s level of output and the cost of inputs ? Demand for puter programmers is derived from how much software Microsoft expects to sell 169。2020 Pearson Education, Inc. Chapter 14 6 Factor Input Demand – One Variable Input ?How does a firm decide if it is profitable to hire another worker? ?If the additional revenue from the output of hiring another worker is greater than its cost ?Marginal Revenue Product of Labor (MPRL) ? Additional revenue resulting from the sale of output created by the use of one additional unit of an input 169。2020 Pearson Education, Inc. Chapter 14 8 Factor Input Demand – One Variable Input ?MRPL is the additional output obtained from an additional unit of labor, multiplied by the additional revenue from an extra unit of output ?Additional output is given by MPL and additional revenue is MR 169。2020 Pearson Education, Inc. Chapter 14 10 Factor Input Demand – One Variable Input ?In a petitive market, MR = P ?This means, for a petitive market ))(( PMPM R P LL ??Graphically, diminishing marginal returns, MPL falls as L increases 169。2020 Pearson Education, Inc. Chapter 14 12 Factor Input Demand – One Variable Input ?Choosing the profitmaximizing amount of labor: ?If MRPL w (the marginal cost of hiring a worker): hire the worker ?If MRPL w: hire less labor ?If MRPL = w: profit maximizing amount of labor 169。2020 Pearson Education, Inc. Chapter 14 14 Factor Input Demand – One Variable Input ?Quantity of labor demand changes in response to the wage rate ?If the market supply of labor increases relative to demand (baby boomers or female entry), a surplus of labor will exist and the wage rate will fall 169。2020 Pearson Education, Inc. Chapter 14 16 Factor Input Demand – One Variable Input ?Comparing Input and Output Markets p ro d u c t i o n of MC MPMP MRM R ))((M PM R P w o r k e r sofn u m b e r m a x i m i z i n gp ro f i t a t a n d M R ))(MP(M R PLLLLLL?????wwww169。2020 Pearson Education, Inc. Chapter 14 18 Factor Input Demand – Many Inputs ?In choosing more than one variable input, a change in the price of one input changes the demand for the others ?Scenario ?Producing farm equipment with two variable inputs: ? Labor ? Assemblyline machinery 169。2020 Pearson Education, Inc. Chapter 14 20 Factor Input Demand – Many Inputs ? If wage rate is $20/hr, firm hires 100 worker