100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
Previously searched by you
Previously searched by you
logo
Summary Chapter 3 - Week 2 - George J. Bordas (2021). Labor Economics, 8th Ed R61,16
Add to cart
Quickly navigate to
Preview
  2.  
  3. Universiteit Utrecht (UU)
  4.  
  5. ECB3ARBE (ECB3ARBE)

Summary

Summary Chapter 3 - Week 2 - George J. Bordas (2021). Labor Economics, 8th Ed
 0 purchase
  • Course
  • ECB3ARBE (ECB3ARBE)
  • Institution
  • Universiteit Utrecht (UU)
  • Book
  • Labor Economics

Summary in 3 pages of the third chapter ofGeorge J. Bordas (2021). Labor Economics, 8th Ed. From the course Labour Economics in the major from EBE.

Preview 1 out of 3  pages

Document information

  • No
  • Chapter 3
  • September 13, 2023
  • 3
  • 2023/2024
  • Summary

Subjects

  • book
  • labor economics
  • labour economics
  • chapter 3
  • concise
  • short
  • ebe
  • summary
  • exam
  • economics and business economics

Connected book

book image

Book Title:

Author(s):

  • Edition:
  • ISBN:
  • Edition:

More summaries for

  • ECS2604 Assessment 4 (COMPLETE QUESTIONS & ANSWERS) Semester 2 2024 - DUE 8 November 2024 ;100 % TRUSTED workings, Expert Solved, Explanations and Solutions
  • ECS2604 Assessment 4 (COMPLETE QUESTIONS & ANSWERS) Semester 2 2024 - DUE 8 November 2024 ;100 % TRUSTED workings, Expert Solved, Explanations and Solutions
  • ECS2604 Assessment 4 (COMPLETE QUESTIONS & ANSWERS) Semester 2 2024 - DUE 8 November 2024 ;100 % TRUSTED workings, Expert Solved, Explanations and Solutions
All for this textbook (8)

Written for

  • Universiteit Utrecht (UU)
  • Economics and Business Economics
  • ECB3ARBE (ECB3ARBE)
All documents for this subject (1)

Seller

avatar-seller
lalilalilou2003

Content preview

George J. Bordas (2021). Labor Economics, 8th Ed

3. Labor demand
3.1 - The production function


The production function is represented with a two axis graph, with employee-hour E on
the horizontal axis, and the capital K on the vertical one. The shape of the curve is
concave, presenting marginally diminishing returns.

The marginal product of labor (which we denote by MPE) gives the change in output
resulting from hiring an additional worker, holding constant the quantities of all other
inputs. Similarly, the marginal product of capital (or MPK) gives the change in output
resulting from a one-unit increase in the capital stock, holding constant the quantities of
all other inputs.

We define the average product of labor (or APE) as the amount of output produced by the
average worker. This quantity is defined by APE = q/E. Moreover, we can find the profit
maximizing function π = pq - wE - rK. From the firm’s point of view, all of these prices are
constants, beyond its control. A firm that cannot influence prices is said to be a perfectly
competitive firm. Because a perfectly competitive firm cannot influence prices, it
maximizes profits by hiring the “right” amount of labor and capital.

3.2 - The short run

To obtain the dollar value of what each additional worker produces, we multiply the
marginal product of labor times the price of the output. This quantity is called the value
of the marginal product of labor and is given by VMPE = p × MPE. Because the value of
marginal product equals the marginal product of labor times the (constant) price of the
output, the value of marginal product curve is simply a “blown-up” version of the marginal
product curve. We define the value of average product of labor as VAPE = p × A PE

We can now derive the short-run demand curve for labor. This demand curve tells us what
happens to the firm’s employment as the wage changes, holding capital constant. It takes
into account the industry’s expansion on output prices.

The requirement that firms hire workers up to the point where the value of marginal prod-
uct of labor equals the wage gives the firm’s “stopping rule” in its hiring decision—that is
also known as the marginal productivity condition. w = VMPE

3.3 - The long run
An isoquant gives the combinations of labor and capital that produce the same level of
output. The absolute value of the slope is called the marginal rate of technical
substitution, ΔK / ΔE = − MPE / MPK.

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through EFT, credit card or Stuvia-credit for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying this summary from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller lalilalilou2003. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy this summary for R61,16. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

64670 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy summaries for 15 years now

Start selling

Recently viewed by you

Exam (elaborations) ·

(0)

Prometric CNA Practice Test 2023 QUESTIONS & ANSWERS ( A+ GRADED 1005 VERIFIED)

Exam (elaborations) ·

(0)

HESI Mental Health RN V1-V3 Test Banks -with 100% verified solutions-2023-2024

Exam (elaborations) ·

(0)

Factors that maintain a Resting Membrane Potential 2023 already passed

Case ·

(0)

NURS 1102 PASSPOINT MOOD ADJUSTMENT AND DEMENTIA DISORDERS EXAM REVIEW GUIDE

Exam (elaborations) ·

(0)

Medical Terminology - Final Exam Study Guide with 100% Complete Solutions

Exam (elaborations) ·

(0)

Psych 282 Token Economies Test Questions And Answers With Complete Solutions

Exam (elaborations) ·

(0)

NR 222 Exam 2 : NR 222 Practice Exam 2: Questions & Answers: Guaranteed A+ Score

Exam (elaborations) ·

(0)

HESI RN Pharmacology Exam | Correctly Answered and Graded A+ Updated 2024

Exam (elaborations) ·

(0)

Theology 1 Exam 1 - Dr. Morgan Questions and Answers Latest updated 2023

R61,16
  • (0)
Add to cart
Added