Unit 5: The Resource Market

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1 February AP Microeconomics Unit : Resource Market. Resource Demand Curve Unit : The Resource Market Review. Give an example of Derived Demand.. Define MRP.. Explain the difference between MRP and MR.. Why does the MRP fall as more workers are hired?. Identify the two ways to calculate MRP.. Define MRC.. Explain the difference between MRC and MC. 8. How does a firm decide how many workers to hire? 9. Name Colleges Why do people with only high school degrees make less money on average? Does having an education mean that you will automatically have a higher income? Employers assume they have low productivity and will generate less additional revenue. Real Life Application Top Fastest Growing Jobs (). Computer Software Engineers, Applications. Computer Support Specialists. Computer Software Engineers, Systems. Computer Systems Administrators. Data Communications Analyst Top Fastest Declining Jobs. Railroad Switch Operators. Shoe Machine Operators. Telephone Operators. Radio Mechanics. Loan Interviewers WHY? You ve got to learn computers! Real Life Application Chapter McConnell Brue, th Edition

2 February AP Microeconomics Unit : Resource Market. Resource Demand Curve The MRP of a resource equals the Demand. Video: Did You Know? 8 Drawing the Demand Curve for Resources Yesterday's Activity 9 = $ MRP Wage = $ Shows how many workers a firm is willing and able to hire at different wages. 9 9 = $ MRP Plotting the MRP/Demand curve Wage = $ Demand for this resource $ 8 Demand=MRP Why is it downward sloping? Because of the law of diminishing marginal returns Each additional resource is less productive and therefore is worth less than the previous one 8 Chapter McConnell Brue, th Edition

3 February AP Microeconomics Unit : Resource Market. Resource Demand Curve $ 8 Demand=MRP This model applies to land, labor, and capital Notice the inverse relationship between wage and quantity of resources demand What happens if demand for the product increases? $ 8 MRP increases causing demand to shift right D =MRP 8 8 Shifters of Resource Demand.) Changes in the Demand for the increase of the product increases MRP and demand for the resource..) Changes in ivity Technological Advances increase and therefore MRP/Demand..) Changes in of Other Resources Substitute Resources Ex: What happens to the demand for assembly line workers if price of robots falls? Complementary Resources Ex: What happens to the demand nails if the price of lumber increases significantly? Drawing the Demand Curve for Resources = $ Wage = $ Cost 9. of the good would increase.. Value of each worker would increase. How would this change if the demand for the good increased significantly? 9 = $ Wage = $ 8 Chapter McConnell Brue, th Edition

4 February AP Microeconomics Unit : Resource Market. Resource Demand Curve 9 = $ Wage = $ Each worker is worth more!! THIS IS DERIVED DEMAND. 9 = $ Wage = $ Cost How 9 would this change if the. would increase.. Value of each worker would increase. productivity of each worker increased? 9 = $ Wage = $ Each worker is worth more! More demand for the resource. Shifters of Resource Demand Identify the Resource and Shifter (ceteris paribus):. Increase in demand for microprocessors leads to a(n) in the demand for processor assemblers.. Increase in the price for plastic piping causes the demand for copper piping to.. Increase in demand for small homes (compared to big homes) leads to a(n) the demand for lumber.. For shipping companies, in price of trains leads to decrease in demand for trucks.. Decrease in price of sugar leads to a(n) in the demand for aluminum for soda producers.. Substantial increase in education and training leads to an in demand for skilled labor. Shifters of Resource Demand Resource Supply Shifters Identify the Resource and Shifter (ceteris paribus):. Increase in demand for microprocessors leads to a(n) increase in the demand for processor assemblers.. Increase in the price for plastic piping causes the demand for copper piping to. increase. Increase in demand for small homes (compared to big homes) leads to a(n) decrease the demand for lumber.. For shipping companies, decrease in price of trains leads to decrease in demand for trucks.. Decrease in price of sugar leads to a(n) increase in the demand for aluminum for soda producers.. Substantial increase in education and training leads to an increase in demand for skilled labor. Supply Shifters for. Number of qualified workers Education, training, & abilities required. Government regulation/licensing Ex: What if waiters had to obtain a license to serve food?. Personal values regarding leisure time and societal roles. Ex: Why did the US supply increase during WWII? Why do some occupations get paid more than others? Chapter McConnell Brue, th Edition

5 February AP Microeconomics Unit : Resource Market. Resource Demand Curve With your partner... Use supply and demand analysis to explain why surgeons earn an average salary of $, and gardeners earn $,. Supply and Demand For Surgeons S L D L Supply and Demand For Gardeners S L D L What are other reasons for differences in wage? Market Imperfections Insufficient/misleading job information This prevents workers from seeking better employment. Geographical Immobility Many people are reluctant or too poor to move so they accept a lower wage Unions Collective bargaining and threats to strike often lead to higher that equilibrium wages Wage Discrimination Some people get paid differently for doing the same job based on race or gender (Very illegal!). Glass Ceilings Chapter McConnell Brue, th Edition

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