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RECESSION: The common term used for the contraction phase of the business cycle. A general period of declining economic activity. During a recession, real gross domestic product declines by 10 percent or so and the unemployment rate rises from it's full employment 5 percent level up to the 6 to 10 percent range. Inflation tends to be low or non-existent during a recession. Recession last anywhere from six to eighteen months, with one year being common.
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Lesson 23: Factor Market Equilibrium | Unit 3: Perfect Competition
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Page: 13 of 24
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- This diagram sets the stage for analyzing the labor employment decision by a given firm, assuming perfect competition holds.
- The critical question facing the firm is: How many workers should it hire?
- The profit-maximizing decision by the firm is to hire 50 workers at the $10 wage.
- Should the firm hire more workers, profit declines.
- Should the firm hire fewer workers, profit declines.
- The critical conclusion from this analysis is that a firm in a perfect competition factor market employs a factor such that marginal revenue product (MRP) is equal to marginal factor cost (MFC).
- However, because this marginal factor cost (MFC) is equal to the factor price (W) for perfection competition, we have the secondary result that:
- MRP = W
- This is THE condition for efficiency in a factor market.
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IMPLICIT COST An opportunity cost that does not involve a monetary payment or any other form of compensation. The monetary payment that is often made to compensate the person who initially foregoes the satisfaction is not made for implicit cost. There is no payment to transfer the burden of the opportunity cost from the original person to someone else. Implicit cost is also occasionally termed implicit opportunity cost.
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PURPLE SMARPHIN
[What's This?]
Today, you are likely to spend a great deal of time browsing about a thrift store looking to buy either a birthday gift for your aunt or a pair of leather sandals that won't cause blisters. Be on the lookout for pencil sharpeners with an attitude.
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This isn't me! What am I?
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The first paper notes printed in the United States were in denominations of 1 cent, 5 cents, 25 cents, and 50 cents.
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"Only great minds can afford a simple style." -- Stendhal, writer
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AOQ
Average Outgoing Quality
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