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Micro 5.3 - Firms in Perfectly Competitive Factor Markets

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This video covers topic 5.3 of the AP Microeconomics Course Exam Description (CED). This video is about all firms that purchase labor (and other resources) in perfectly competitive factor markets. It also cover profit maximizing quantities of workers to hire, least cost combinations of resources, and profit maximizing combinations of resources.
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4 сен 2024

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Комментарии : 27

@slifer4963 5 месяцев назад

Thank you so much, I needed this, I didn't understand this in class.

@ReviewEcon 5 месяцев назад

You're very welcome! Good luck on your exams!

@omarqasem747 3 месяца назад

but if the demand for labor increased , wont the mrp be affected too, and vive versa, since D equals all mrps???( i mean demand in firm and demand in market, isnt the demand in market equal MRP or D of all firms)

@ReviewEcon 3 месяца назад

Not sure I understand the question, but... Market demand is the sum of all firm demand (MRP), but an increase in market demand won't necessarily shift firm demand. Also each firm is too tiny to impact the market so a shift of firm demand (MRP) won't shift market demand unless the change impacts all firms. I hope that helps!

@omarqasem747 3 месяца назад

@@ReviewEcon oh got it, thanks, it's just the shifter are somehow confusing to know whether to change the market demand or firm demand

@martinbejarano8912 4 месяца назад

Thank you very much! this is high quality content!

@ReviewEcon 4 месяца назад

You're very welcome! Good luck on your exams!

@Top7-1000 5 месяцев назад

Thank you for the video! I forgot how the factor market worked.

@ReviewEcon 5 месяцев назад

You're very welcome! Good luck on your exams!

@chrislee9539 4 месяца назад

at 11:36 should it be more capital and less labor to make mp\p = mp\p ; labor is 3 capital is 2 to make labor equal to capital make labor dec and capital inc?

@ReviewEcon 4 месяца назад

If I understand your question correctly, yes. You want more of the higher MP/$ because then the ratio will decrease as more of that resources is used. You want less of the lower MP/$ because then the ratio will rise as less of that resource is used. This does make them closer to being equal.

@theyluvh 4 месяца назад

Does the change that happens on the MRP of the last worker differ from the MRP it’s self

@ReviewEcon 4 месяца назад

They won't always be the same. The MRP will of the last will equal the MRC on the graph. So, if the MRC increases, so does the MRP of the last worker hired. I hope that helps!

@theyluvh 4 месяца назад

@@ReviewEconIf the MRC increases, does that mean the MRP itself would decrease so that it can equal MRC again?

@ReviewEcon 4 месяца назад

Changing MRC doesn't shift the MRP, but the MRC will intersect MRP at a higher or lower point (and value). That point (value on the Y-axis)is the MRP of the last worker hired.

@Hi-un8wp 4 месяца назад

Hey, just wanted to clarify something. At 10:30 you say marginal revenue product / price, whereas the text on screen is just marginal product. I assume it doesn't matter because they are producing the same good, but just wanted to make sure.

@Hi-un8wp 4 месяца назад

nvm I didn't finish the video

@ReviewEcon 4 месяца назад

Definitely misspoke there. MRP/P for both resources is the profit max combination and MP/P is how you find least cost combination. I hope that helps!

@Mouath99 4 месяца назад

In a monopsonistic labor market, a firm will continue to hire workers until the marginal revenue product of labor (A) equals marginal factor (resource) cost, resulting in more workers being hired at a lower wage compared with a perfectly competitive labor market (B) equals marginal factor (resource) cost, resulting in fewer workers being hired at a lower wage compared with a perfectly competitive labor market (C) equals marginal factor (resource) cost, resulting in fewer workers being hired at a higher wage compared with a perfectly competitive labor market (D) is less than marginal factor (resource) cost, resulting in more workers being hired at a lower wage compared with a perfectly competitive labor market (E) is less than marginal factor (resource) cost, resulting in fewer workers being hired at a lower wage compared with a perfectly competitive labor market What is the answer here

@ReviewEcon 4 месяца назад

Take a look at this monopsony graph. Wc and QC are the competitive market outcome (where supply and demand intersect). Wm and Qm are the monopsony outcome. They hire where MRP=MRC, but pay down to the supply curve. They hire fewer and pay less. www.reviewecon.com/wp-content/uploads/2018/08/monopsony.png

@Mouath99 4 месяца назад

@@ReviewEcon so if the wage is high we hire more and if its less we hire less?

@ReviewEcon 4 месяца назад

Not sure what you mean. Monopsony hires fewer workers and pays less than a competitive market because they have market power (the firm is the only employer). In a competitive market, there are many employers so firms have no market power.

@ReviewEcon 4 месяца назад

The relationship you mention above is the supply curve. The demand curve is the opposite.