ECON 3240 Chapter Notes - Chapter 1-2: Indifference Curve, Budget Constraint
Document Summary
Study of markets for labor services, and the interactions between participants which determine the price and quantity of labor services exchanged. Minimum wage, unemployment insurance benefits, pensions, maternity leave, welfare. Certain key outcomes of interest to labor economists: U rate is most commonly used measure of labor force conditions. Economics is the study of how people make decisions about the allocation of scarce resources. Labor market: good being bought and sold is labor services. Worker"s goal: maximize his utility subject to his budget constraint. Utility maximizing choice: bundle of (c, l) at which mrs=w. Mrs: rate at which workers would like to substitute leisure for consumption. W: rate at which workers can substitute leisure for consumption. When utility cost of working that first hour is higher than the utility gains from extra consumption. When mrs when l = t is greater than the wage. Effect of a wage increase on a worker"s labor supply decision.