This document discusses theories of wage determination in labor markets including perfectly competitive labor markets, monopsony, and delayed supply responses. In a perfectly competitive labor market, the equilibrium wage and employment are determined by the intersection of supply and demand. A monopsony is a labor market with a single employer, which pays workers less than a competitive wage and hires fewer workers, resulting in inefficiency. Delayed supply responses in some professions can lead to cyclical "cobweb" adjustments as supply lags behind changing demand.
In this presentation, we will understand concept theories and types of wages, compensations and earnings.
To know more about Welingkar School’s Distance Learning Program and courses offered, visit:
http://www.welingkaronline.org/distance-learning/online-mba.html
In this presentation, we will understand concept theories and types of wages, compensations and earnings.
To know more about Welingkar School’s Distance Learning Program and courses offered, visit:
http://www.welingkaronline.org/distance-learning/online-mba.html
Role of trade unions in wage rate rate determinationMd. Furqan Sabri
views of classical and modern economist for trade unions in influencing wage rates.
how can trade unions influence wages rates ?
To what extent they can get their wage rates increased ?
Causes of low bargaining power of labour class
Labour Cost
System of wages
Piece Rate or Piece Work
Why Control labour costs?
Idle Time Cost
Types of incentive wage plans
Halsey premium method and Rowan’s method
Merrick Differential Piece Rate System
Measuring workforce performance
Labour turnover
Turnover and costing
Calculation Methods
Labour productivity
Alaa Mohamed Abdel-Rahman - Economic Analyst, Ministry of Finance
ERF and World Bank Youth Essay Competition Award Ceremony
Cairo, Egypt, January 17, 2017
www.erf.org.eg
A firm’s pricing market power depends on its competitive environment.
In perfectly competitive markets, firms have no market power. They are “price takers.” They make decisions based on the market price, which they are powerless to influence.
In markets that are not perfectly competitive (which describes most markets), most firms have some degree of market power.
Strategy in the absence of market power
Firms cannot influence price and, because products are not unique, they cannot influence demand by advertising or product differentiation.
Managers in this environment maximize profit by minimizing cost, through the efficient use of resources, and by determining the quantity to produce.
https://azpapers.com/imperfect-competition-market-analysis/
In this presentation we consider the theory of wage-setting with a monopsony employer and the possible impact that a trade union might have on wages and employment. We also look at efficiency wage theory and mutual gains from pay bargaining between stakeholders.
MBA 681 Economics for Strategic DecisionsPrepared by Yun Wan.docxalfredacavx97
MBA 681 Economics for Strategic Decisions
Prepared by Yun Wang
1. How does firm maximize profit.
2. Poduction decision in the perfect competitive market.
3. Production decision in monopolistic competitive market.
4. Production decision in oligopoly.
5. Production decision in monoply.
6. Two special models in oligopoly market.
1. How a Firm Maximizes Profit:
All firms try to maximize profits based on the following equation:
Profit = Total Revenue − Total Cost
The rules we have just developed for profit maximization are:
1. The profit-maximizing level of output is where the difference between total revenue and total
cost is greatest, and
2. The profit-maximizing level of output is also where MR = MC.
Notice: All of these rules do not require the assumption of market type; they are true for all
firms with different market structures (perfect competition, monopolistic competition,
oligopoly, monopoly)!
The Four Market Structures:Structures
Market Structure
Characteristic Perfect Competition
Monopolistic
Competition Oligopoly Monopoly
Type of product Identical Differentiated Identical or differentiated Unique
Ease of entry High High Low Entry blocked
Examples of
industries
Growing wheat
Poultry farming
Clothing stores
Restaurants
Manufacturing computers
Manufacturing automobiles
First-class mail delivery
Providing tap water
2. Profit Determination in Perfect Competitive Market:
A firm maximizes profit at
the level of output at which
marginal revenue equals
marginal cost.
The difference between
price and average total cost
equals profit per unit of
output.
Total profit equals profit per
unit of output, times the
amount of output: the area
of the green rectangle on the
graph.
In the graph on the left, price
never exceeds average cost,
so the firm could not possibly
make a profit.
The best this firm can do is to
break even, obtaining no
profit but incurring no loss.
The MC = MR rule leads us to
this optimal level of
production.
The situation is even worse
for this firm; not only can it
not make a profit, price is
always lower than average
total cost, so it must make
a loss.
It makes the smallest loss
possible by again following
the MC = MR rule.
No other level of output
allows the firm’s loss to be
so small.
Identifying Whether a Firm Can Make a Profit
Once we have determined the quantity where MC = MR, we can immediately know
whether the firm is making a profit, breaking even, or making a loss. At that quantity,
• If P > ATC, the firm is making a profit
• If P = ATC, the firm is breaking even
• If P < ATC, the firm is making a loss
Even better: these statements hold true at every level of output.
However, if the price is too low, i.e. below the minimum point of
AVC, the firm will produce nothing at all.
The quantity supplied is zero below this point.
3. Profit Determination in Monopolistic Competitive Market:
(1 of 3)
In the short run, a monopol.
June 3, 2024 Anti-Semitism Letter Sent to MIT President Kornbluth and MIT Cor...Levi Shapiro
Letter from the Congress of the United States regarding Anti-Semitism sent June 3rd to MIT President Sally Kornbluth, MIT Corp Chair, Mark Gorenberg
Dear Dr. Kornbluth and Mr. Gorenberg,
The US House of Representatives is deeply concerned by ongoing and pervasive acts of antisemitic
harassment and intimidation at the Massachusetts Institute of Technology (MIT). Failing to act decisively to ensure a safe learning environment for all students would be a grave dereliction of your responsibilities as President of MIT and Chair of the MIT Corporation.
This Congress will not stand idly by and allow an environment hostile to Jewish students to persist. The House believes that your institution is in violation of Title VI of the Civil Rights Act, and the inability or
unwillingness to rectify this violation through action requires accountability.
Postsecondary education is a unique opportunity for students to learn and have their ideas and beliefs challenged. However, universities receiving hundreds of millions of federal funds annually have denied
students that opportunity and have been hijacked to become venues for the promotion of terrorism, antisemitic harassment and intimidation, unlawful encampments, and in some cases, assaults and riots.
The House of Representatives will not countenance the use of federal funds to indoctrinate students into hateful, antisemitic, anti-American supporters of terrorism. Investigations into campus antisemitism by the Committee on Education and the Workforce and the Committee on Ways and Means have been expanded into a Congress-wide probe across all relevant jurisdictions to address this national crisis. The undersigned Committees will conduct oversight into the use of federal funds at MIT and its learning environment under authorities granted to each Committee.
• The Committee on Education and the Workforce has been investigating your institution since December 7, 2023. The Committee has broad jurisdiction over postsecondary education, including its compliance with Title VI of the Civil Rights Act, campus safety concerns over disruptions to the learning environment, and the awarding of federal student aid under the Higher Education Act.
• The Committee on Oversight and Accountability is investigating the sources of funding and other support flowing to groups espousing pro-Hamas propaganda and engaged in antisemitic harassment and intimidation of students. The Committee on Oversight and Accountability is the principal oversight committee of the US House of Representatives and has broad authority to investigate “any matter” at “any time” under House Rule X.
• The Committee on Ways and Means has been investigating several universities since November 15, 2023, when the Committee held a hearing entitled From Ivory Towers to Dark Corners: Investigating the Nexus Between Antisemitism, Tax-Exempt Universities, and Terror Financing. The Committee followed the hearing with letters to those institutions on January 10, 202
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Personal development courses are widely available today, with each one promising life-changing outcomes. Tim Han’s Life Mastery Achievers (LMA) Course has drawn a lot of interest. In addition to offering my frank assessment of Success Insider’s LMA Course, this piece examines the course’s effects via a variety of Tim Han LMA course reviews and Success Insider comments.
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Embracing GenAI - A Strategic ImperativePeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
3. 6-3
Perfectly Competitive Labor
Market
o Perfectly competitive labor markets have
the following characteristics:
• Large number of firms trying to hire an
identical type of labor
• Numerous qualified people independently
offering their services
• Neither firms nor workers have control over
the market wage
• Perfect, costless information and labor
mobility
4. 6-4
Market Labor Supply
Quantity of
Labor Hours
Wagerate
• Though individuals have
backward-bending labor supply
curves, market supply curves
are usually positively sloped
over normal wage ranges.
• High relative wages attract
workers away from household
production, leisure, or their
previous jobs.
• The height of the market
supply curve measures the
opportunity cost of using the
marginal labor hour in this
employment.
S
• The shorter the time period,
the less elastic is the labor
supply curve.
5. 6-5
Wage and Employment
Determination
Quantity of
Labor
Hours
Wage rate
• The equilibrium wage rate W0
and level of employment Q0
occur at the intersection of labor
supply and demand.
• An excess demand of Q2- Q1
would occur at a wage rate of
Wed.
• An excess supply of Q2- Q1
would occur at a wage rate of
Wes.
S
D
Q0
W0
Wed
Q2Q1
Wes
6. 6-6
Labor Supply Determinants
o Other wage rates
• If wages in other occupations rise (fall), then
labor supply will fall (rise).
o Nonwage income
• If nonwage income rises (falls), then labor
supply will fall (rise).
o Preferences for work versus leisure
• If preferences for work increase (decrease),
then labor supply will increase (decrease).
7. 6-7
Labor Supply Determinants
o Nonwage aspects of job
• If the nonwage aspects of a job improve
(worsen), then labor supply will increase
(decrease).
o Number of qualified suppliers
• An increase (decrease) in the number of
qualified workers will increase (decrease)
labor supply.
8. 6-8
Labor Demand Determinants
o Product demand
• Changes in product demand that
increase (decrease) the product price, will
increase (decrease) labor demand.
o Productivity
• An increase (decrease) in productivity will
increase (decrease) labor demand,
assuming that it does not cause an offset
in the product price.
9. 6-9
Labor Demand Determinants
o Prices of other resources
• For gross substitutes, an increase
(decrease) in the price of a substitute
input will increase (decrease) labor
demand.
• For gross complements, an increase
(decrease) in the price of a complement
input will decrease (increase) labor
demand.
10. 6-10
Labor Demand Determinants
o Prices of other resources
• For pure complements, an increase
(decrease) in the price of a complement
input will decrease (increase) labor
demand.
o Number of employers
• An increase (decrease) in the number of
employers will increase (decrease) labor
demand.
11. 6-11
Changes in Labor Demand
Quantity of
Labor Hours
Wage rate
• Assume that the productivity
of workers rises due to
computer innovations.
• This will raise the marginal
product and thus shift the
labor demand curve to the
right (D0 to D1).
• The equilibrium wage rate
will rise to W1 and equilibrium
quantity will rise to Q1.
S
D0
Q0
W0
D1
Q1
W1
12. 6-12
Changes in Labor Supply
Quantity of
Labor Hours
Wage rate
• Assume that the number of
working-age immigrants
increases substantially.
• This will shift the labor
supply curve to the right (S0 to
S1).
• The equilibrium wage rate
will fall to W1 and equilibrium
quantity will rise to Q1.
S0
D0
Q0
W0
S1
Q1
W1
13. 6-13
Wage and Employment for a
Perfectly Competitive Firm
Quantity of
Labor Hours
Wage rate• A firm hiring in a perfectly
competitive labor market is a
“wage taker.” Its labor supply
curve, SL=MWC=PL, is
perfectly elastic at W0.
• A firm will hire another
worker if the additional
revenue the worker generates,
marginal revenue product
(MRP), is greater than the cost
of hiring an additional worker,
marginal wage cost (MWC).
SL=MWC=PL
DL=MRP=VMP
Q0
W0
• The firm maximizes its profits
by hiring Q0 units of labor
(MRP=MWC).
14. 6-14
Allocative Efficiency
o An efficient allocation of labor is
obtained when society gets the largest
possible amount of output from a
given amount of labor.
o Efficient allocation requires the VMP of
labor for each product be equal to the
price of labor.
o Perfect competition in the product and
labor markets creates allocative
efficiency.
15. 6-15
Questions for Thought
1. What effect will each of the following have on
the market demand for a specific type of labor:
(a) An increase in product demand that increases the
product price.
(b) A decline in the productivity of this type of labor.
(c) An increase in the price of a gross substitute of labor.
(e) The demise of several firms that hire this type of
labor.
(f) A decline in the market wage for this type of labor.
(d) An increase in the price of a gross complement of
labor.
17. 6-17
Wage and Employment for a
Monopolist
Quantity of
Labor Hours
Wage rate• Because a monopolist faces
a downward sloping demand
curve, increased hiring of labor
and the resulting larger output
force the firm to lower its price.
• Because it must lower its
price on all units, its marginal
revenue (MR) is less than the
price.
SL=MWC=PL
DC=VMP (MP*P)
QC
W0
• The firm’s MRP curve (MP *
MR) lies below the VMP curve
(MP * P), and thus firm hires QM
rather than QC.
DM=MRP (MP*MR)
a
b
c
QM
• An efficiency loss of abc
results.
18. 6-18
1. Complete the following table for a firm operating
in labor market A and product market AA.
Questions for Thought
Labor Wage TWC MWC MRP VMP
1 $10 $16 $16
2 $10 $14 $15
3 $10 $12 $14
4 $10 $10 $12
5 $10 $8 $10
6 $10 $6 $8
(a) What can we conclude about the degree of
competition in the labor market and product market?
(b) What is the profit maximizing level of employment?
20. 6-20
Monopsony
o A monopsony is a labor
market where a single firm is
the sole hirer of a particular
type of labor.
• A monopsonist has control over
the wage rate workers are paid
by hiring more or less labor.
21. 6-21
$ 2
$ 6
$12
$20
$30
$42
$56
-----
TWC
(3)
$ 7
$ 9
$ 8
$ 3
(VMP)
MRP
(5)
$ 6
$ 5
$ 4
$ 10
• A monopsonist faces an upward sloping labor curve. It has to pay a
higher wage to get more workers.
• The total wage cost (TWC) to the firm is calculated as the number of
units of labor times the wage rate.
• The firm maximizes profits by hiring MRP = MWC at 3 units.
• The marginal wage cost (MWC) is the additional cost of hiring the last
worker.
Monopsony
MWC
(4)
---
$ 2
$ 4
$ 6
$ 8
$10
$12
$14
Wage
(2)
Units of
Labor (L)
(1)
0
1
2
3
4
5
6
7
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
22. 6-22
Wage and Employment
for a Monopsonist
Quantity of
Labor Hours
Wage rate• The firm’s MWC lies above
the SL.
• To attract these workers, it
need only pay WM.
SL=PL
QC
• The firm thus pays a lower
wage (WM rather than WC) and
hires fewer units of labor (QM
instead of QC) than firms in a
competitive labor market.
DL=MRP=VMP
• An efficiency loss of abc
results.
MWC
WC
QM
WM
• The monopsonist equates its
MRP with its MWC at point a
and hires QM units of labor.
b
a
c
24. 6-24
Cobweb Model
• The market for highly trained
professionals such as nurses
has delayed supply responses
to changes in demand and
wage rates.
Q0
W0
D0
Quantity of
Labor Hours
Wage rate S
• Because the quantity of labor
supplied is temporarily fixed at
Q0, the wage rate rises to W1
when demand changes from D0
to D1.
• At wage rate W1, Q1 nurses
are attracted to the profession.
• With supply fixed at Q1, the
wage rate falls to W2.
• With this wage rate, the
quantity of nurses falls over
time to Q2.
• The cycle repeats until
equilibrium is achieved at the
intersection of S and D.
D1
W1
W2
Q1
Q2
25. 6-25
Evidence
o Some evidence exists for cobweb
adjustments in markets such as
lawyers and engineers.
o Critics argue that:
• Students make choices on the basis of the
lifetime earnings stream rather than
starting salaries.
• Students make a forecast of the long-run
outcome of a change in demand or supply
and make the right choice.
