AP Economics – 12/13/19

I. Bellwork – Pg 704 FRQ #2

II.  Objectives

• Distinguish between perfectly competitive and imperfectly competitive labor markets
• Analyze and construct supply graphs for labor for firm and perfectly competitive and imperfectly competitive labor markets
• Determine the point where workers will continued to be hired for perfectly competitive and imperfectly competitive labor markets

III.  Discussion Pages 710-712

A  Equilibrium in the Labor Market

• Figure 71.3 p 710 Perfectly competitive –
• Market Labor curve is horizontal   
• Equilibrium Wage =MFCL
• Hire until MRPL = Market Wage

B. When the Labor Market is Not Perfectly Competitive

• Monopsony – See Table 71.1 & Figure 71.4
• Marginal Resource Cost for a Monopsony Employer – part 1
• In perfectly competitive markets the MFCL is constant and doesn’t change
• Non perfect markets must charge hire rates to attract more workers MFCL increases

C.  Equilibrium in the Imperfectly Competitive Labor Market

• Hire until MRPL = MFCL
• Figure 71.4 P. 711 (marginal factor cost of labor is higher than the market labor supply curve)
• Figure 71.5 p 712 Equilibrium wage is less than MFCL

IV.  Classwork – 71.3 – See Module 71 Worksheets on iLearn

V.  Homework 71.4 Part 1 & 2

AP Micro Economics F2019