5.2 Perfectly Competitive Labor Market and Firm: Econ Concepts in 60 Seconds- Advanced Placement

Mr. Clifford explains key economic concepts in a perfectly competitive labor market, focusing on the resource market, particularly labor. He discusses how wages affect the demand and supply of labor, illustrating the downward-sloping demand curve and upward-sloping supply curve. The video also covers the concept of firms as wage takers, where workers must accept market-set wages. The marginal resource cost (MRC) and marginal revenue product (MRP) are explained, highlighting their roles in hiring decisions.

In a perfectly competitive labor market, what happens to the demand for workers when wages are high?

• Demand for workers increases

• Demand for workers remains constant

• Demand for workers decreases

• Demand for workers becomes unpredictable

Why must workers accept the market wage in a perfectly competitive labor market?

• Because firms are willing to pay more

• Because workers can negotiate higher wages

• Because firms can hire other workers at the market wage

• Because the government sets the wage

What is the marginal resource cost in a perfectly competitive labor market?

• The total cost of all workers

• The cost of hiring one more worker

• The cost of training workers

• The average cost of workers

What does the demand curve for labor represent in this context?

• Average revenue

• Total revenue

• Marginal revenue product

• Marginal cost of production

At what point do firms hire workers in a perfectly competitive labor market?

• Where marginal revenue product equals marginal resource cost

• Where marginal revenue equals total revenue

• Where total cost equals total revenue

• Where marginal cost equals average cost