ECON 1B03 Lecture Notes - Lecture 14: Cherry Picking, Marginal Revenue Productivity Theory Of Wages, Demand Curve
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ECON 1B03 Full Course Notes
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Chapter 14: the markets for factors of production. No control over wage: determined by market. Value of the marginal product of labour, vmpl- a worker"s contribution to tr is their mp (what they add to total output) times p. Vmpl when labour in the sr because the market p of the good is constant. Firm will only hire if their contribution > her cost to the firm. Firm will hire up until point (where profit is maximized) W: mc of the last hired worker is their addition to tc (their wage) Vmpl: mr of the laster worker hired is their addition to tr. P*mpl : firm will hire where mrl = mcl profits maximized. Ex: brady"s bottles sells plastic bottles for sh. 50. Labour is paid /hr: brady will hire until w = vmpl (6th worker, wouldn"t hire the 7th worker because they add to their tr but costs him .