Lesson: The Theory of Labor Markets
Introduction
Introduction
The labor market, like all markets, has a demand and a supply. Why do firms demand labor? Why is an employer willing to pay you for your labor? It is not because the employer likes you or is socially conscious. Rather, it is because your labor is worth something to the employer--your work brings in revenues to the firm. How much is an employer willing to pay? That depends on the skills and experience you bring to the firm.
| Essential Question |
As you complete this lesson, consider the essential question. By the end of the lesson, you should be able to provide a detailed explanation to this question.
How is demand and supply related to labor?
| Objectives |
By the end of this lesson, you will be able to:
- explain the demand for labor in perfectly competitive output markets
- explain the demand for labor in imperfectly competitive output markets
- describe what determines the going market wage rate
| Key Terms |
As you complete this lesson, look for the key terms. Add each term to your Vocabulary Chart. You may use context clues or the Glossary to help you define each term. Then, write or draw an example to help you remember what each term means.
- first rule of labor markets
- perfectly competitive labor market