Unit 5 Organizing Principles
Overview: In this unit you will analyze the markets for resources. Keep in mind that resources, like land, labor, and capital, are sometimes called factors or inputs. You will be using supply and demand, but remember that firms demand resources and individuals supply. Like the product market, the curves have specific shifters. You must feel comfortable analyzing labor markets and showing the results of minimum wage. The most important graph is the side-by-side graph for a market and firm hiring resources in a perfectly competitive resource market. Since the resources are identical, the supply for the firm is set. Firms always hire resources where the marginal revenue product equals the marginal resource cost. Make sure that you can also show the wage and quantity for monopsony. Lastly, understand how to use the profit-maximizing rule and least-cost rule for hiring combinations of resources.
Unit Notes Packet
Unit Homework Packet