5.1

Introduction to Factor Markets

AP Microeconomics

The Labor Market Structure

Marginal Revenue Product (MRP)

Calculating MRP

Marginal Factor Cost (MFC)

The Profit-Maximizing Hiring Rule

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Hire where MRP = Wage: 4 workers at W = $40

Value of Marginal Product (VMP)

When Does MRP Differ from VMP?

Derived Demand

Labor Supply

AP Exam Tips

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Common Mistakes

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Unit 5 topics

Unit 5 overview5.1Introduction to Factor Markets5.2Changes in Factor Demand and Factor Supply5.3Profit-Maximizing Behavior in Perfectly Competitive Factor Markets5.4Monopsony5.5The Minimum Wage and Labor Markets
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