Perfectly Competitive Labour Markets (AQA A-Level Economics): Flashcards
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Practise the cards
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Forces determining wages in perfectly competitive labour market
Forces determining wages in perfectly competitive labour market
Supply and demand
Number of buyers/sellers in perfect competition
Number of buyers/sellers in perfect competition
Large number (many employers and workers)
ACL (Average Cost of Labour) definition
ACL (Average Cost of Labour) definition
Total wage costs divided by number of workers
MCL (Marginal Cost of Labour) definition
MCL (Marginal Cost of Labour) definition
Additional cost of employing one more worker
Labour supply curve faced by firm in perfect competition
Labour supply curve faced by firm in perfect competition
Perfectly elastic (horizontal) at market wage
Profit maximisation condition for labour employment
Profit maximisation condition for labour employment
MRPL = W (marginal revenue product = wage)
Role of firm in perfectly competitive labour market
Role of firm in perfectly competitive labour market
Passive wage-taker at market-determined rate
Action when MRP > W
Action when MRP > W
Hire more workers
Where market equilibrium wage is determined
Where market equilibrium wage is determined
Where labour supply and demand curves intersect
Law of one price in labour markets
Law of one price in labour markets
Identical workers should receive the same wage