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Understanding Producers and Labor Markets: A Comprehensive Overview

Learn about the dynamics of labor supply, producers' technology, production functions, inputs, profit maximization, labor markets, equilibrium, minimal wage, and profit maximization in the short and long run. Explore the complexities of the labor market equilibrium, optimal decision-making, and the variability of profit maximization.

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Understanding Producers and Labor Markets: A Comprehensive Overview

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  1. L15 Producers: Labor Markets

  2. Labor supply (consumers)

  3. Producers • Producers: have a technology • Technology given by production function • Two inputs: Capital and Labor • Example • MPL and MPK (decreasing) • Short and Long run (fixed K or not) • Returns to Scale

  4. MPL (interpretation)

  5. Short Run (fixed K) • Profit maximization • Price taking • Example (Short run)

  6. Short run: Demand for Labor

  7. Labor Market: Equilibrium

  8. Labor Market: Equilibrium • Capital change A) B) C) D)

  9. Labor Market: Equilibrium • Technology • Preferences

  10. Labor Market: Minimal Wage

  11. Long run ( not fixed) • We choose simultaneously and

  12. Long run

  13. Profit Maximization and IRS • Profit • Suppose that are optimal • What can we say about at ? • Profit maximization not always well defined

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