Unit 5: Factor Markets

AP Microeconomics

What Are Factor Markets?

Derived Demand

Key Concepts in This Unit

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The Hiring Rule

2468101020304050WorkersWage / MRP ($)Hire 5 workersMRP (D for labor)MFC = Wage = S

In a competitive labor market: hire where MRP = Wage (MFC)

Unit Exam Weight

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
← Previous4.5 Oligopoly and Game TheoryNext →5.1 Introduction to Factor Markets
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