Today we will continue to study factor markets. We will focus on the prices of land, capital, and entrepreneurial ability (rent, interest, and profits). You should read the text chapter identified below in the homework section, watch the related videos for help in understanding this material, do the activities, and be prepared for the Problem of the Day. This page contains all the information you need for today's class. Use the table of contents on the right to help you navigate.
Read McConnell and Brue (Chapter 12) and watch the following video on the loanable funds market from 3:18 to 6:29.
Do Activity 54.
Watch the following video.
Problem of the Day: You will work cooperatively with your partner to construct a response to the following prompt.
Explain the difference between a perfectly competitive labor market and a monopsonistic labor market.
The table above describes the production function for Staggo's T-shirt firm for one day. Staggo can hire as many workers as he wants for $75 per day and can sell as many T-shirts as he wants for $5 each.
Given the production information above, do each of the following.
Draw a graph showing the firm's demand and supply curves for workers.
Explain how Staggo will determine the number of workers to hire.
Indicate how many workers Staggo will hire.
Assume the wage rate at which Staggo can hire workers he wants increases to $120 per day, and the selling price of T-shirts increases to $6. Do each of the following.
Explain how the demand for workers will change.
Indicate how many workers Staggo will hire.
Indicate the quantity of T-shirts Staggo will produce.
In which type of market structure does Staggo sell his T-shirts? Explain how you know.
Lecture
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