Learning objectives
Explain why the demand for a factor such as labor is derived from the demand for the product it helps to produce
Calculate marginal revenue product (marginal product × marginal revenue) and marginal factor cost, and explain why the MRP curve is the firm's demand curve for the factor
Show how the equilibrium wage and level of employment are determined in a competitive labor market
Explain the shifters of labor demand (product price, productivity, technology and prices of other inputs) and of labor supply (population, alternative opportunities, preferences and training)
Analyze the effects of shifts in factor demand or factor supply on the equilibrium wage and quantity of labor
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