Principles of Microeconomics / Unit 13 MIC 1207 short lesson, about 20 seconds
The Hiring Rule and the Demand for Labor
Captions available
The idea
A firm hires until marginal revenue product equals marginal factor cost; under competition, the wage. The falling part of the marginal revenue product curve is the firm's demand for labor.
In practice
A higher wage moves the firm up its curve to fewer workers.
Where people slip
Only the falling part is demand; on the rising part each worker adds more than the last.
Your place on the trail
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