Ch. 11: Competitive Labor Markets and Unions
marginal product of labor
the additional output produced that results from hiring an additional unit of labor; change in total output divided by change in quantity of labor input used
marginal revenue product of labor
the additional revenue that results from selling the additional output produced by hiring an additional unit of labor; marginal revenue times marginal product of labor
marginal factor cost of labor
the change in total costs associated with employing one additional unit of labor
derived demand
the demand for factors of production that exists because of the demand for the products that the factors produce
market supply of labor
the sum of all individuals' supplies of a type of labor; the total quantity of labor people will offer to the market at various wage rates, other things being equal
market demand for labor
the total quantity of labor demanded at various wage rates, other things constant; the sum of all individual firms' demands for a type of labor; the firms may or may not all be in the same industry
competitive labor market
a labor market in which the wage rate is determined by the interactions of a large number of sellers (suppliers) of labor and a large number of demanders (buyers) of labor; neither group acts in a collusive manner
factor market
a market in which the prices of productive resources (factors of production or inputs) are determined by the interaction of firms acting as buyers with households and firms acting as suppliers of resources