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Ten Labor Market
Models
1. Competitive labor
market in a competitive product market
2. Competitive labor market in an imperfectly competitive
product market
3. Monopsony
4. Union Model: increasing demand for labor
5. Union Model: craft (exclusive) union
6. Union Model: industrial (inclusive) union
7. Union Model: bilateral monopoly
8. Minimum Wage (three models)
a. traditional minimum
wage model (price floor)
b. minimum wage in a monopsony
c. minimum wage and the price elasticity of demand for
labor
For EACH model know the
following:
1. assumptions,
characteristics, and examples
2. graph
3. find the profit maximizing quantity of labor (this is
the quantity that WILL BE HIRED, where MRP = MRC)
4. find the allocatively efficient quantity of labor
(where VMP = W or Qd=Qs)
You will find a summary of each of
these ten models in YELLOW PAGES, on the LESSONS webpage,
and on the MICWEBAPP. It is strongly recommended that you
study these summaries.
REMEMBER: to find the profit
maximizing quantity of workers to hire firms will continue
to hire up to the point where MRP = MRC.
So for any questions that ask "how
many will be hired?" or "what will the wage be?", the first
thing you do is calculate MRP and MRC and then hire all
where the MRP is greater than MRC (MRP > MRC) up to where
MRP = MRC.
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