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Summary labour economics
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Summary of 1 pages for the course A2 Unit F583 - Economics of Work and Leisure at OCR (labour economics)
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A perfectly competitive labor market is like a perfectlycompetitive product market, but let's pretend we're talking
about pizza. Imagine having a certain number of workers, in this
case, cooks, producing a certain amount of output. For example,
we have one cook making five pizzas, two cooks making twelve
pizzas, and three cooks making sixteen pizzas. The wage for the
cooks is $20 and the price at which each pizza can be sold is
$10 each. The answer in this scenario was "three" workers.
• Number of workers: 1, 2, 3, 4, 5
• Output (in pizzas): 5, 12, 16, ?, ?
• Wage: $20
• Selling price: $10 per pizza
The decision to hire an additional worker is based on whether
their added revenue is greater than their wage. For example, if a
fourth cook would bring in an additional $10 in revenue but
cost $20 in wages, it would not be worth it to hire them. The
correct answer in this scenario was still "three".
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