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  2. Marginal revenue productivity theory of wages - Wikipedia

    en.wikipedia.org/wiki/Marginal_revenue...

    Firms operating as monopolies or in imperfect competition face downward-sloping demand curves. To sell extra units of output, they would have to lower their output's price. Under such market conditions, marginal revenue product will not equal . This is because the firm is not able to sell output at a fixed price per unit.

  3. Factor market - Wikipedia

    en.wikipedia.org/wiki/Factor_market

    The firm will continue to hire additional units of labor as long as MRPL > wage rate and will stop at the point at which MRPL = the wage rate. [15] Following this rule the firm is maximizing profits since MRPL = marginal product of labor (MCL) is equivalent to the profit maximization rule of MR = MC. [16]

  4. Profit maximization - Wikipedia

    en.wikipedia.org/wiki/Profit_maximization

    The profit maximization issue can also be approached from the input side. That is, what is the profit maximizing usage of the variable input? [13] To maximize profit the firm should increase usage of the input "up to the point where the input's marginal revenue product equals its marginal costs". [14]

  5. Labor demand - Wikipedia

    en.wikipedia.org/wiki/Labor_demand

    The long-run labor demand function of a competitive firm is determined by the following profit maximization problem: ,, = (,), where p is the exogenous selling price of the produced output, Q is the chosen quantity of output to be produced per month, w is the hourly wage rate paid to a worker, L is the number of labor hours hired (the quantity of labor demanded) per month, r is the cost of ...

  6. Perfect competition - Wikipedia

    en.wikipedia.org/wiki/Perfect_competition

    With this terminology, if a firm is earning abnormal profit in the short term, this will act as a trigger for other firms to enter the market. As other firms enter the market, the market supply curve will shift out, causing prices to fall. Existing firms will react to this lower price by adjusting their capital stock downward. [20]

  7. Theory of the firm - Wikipedia

    en.wikipedia.org/wiki/Theory_of_the_firm

    A study of firms in France illustrated how distortions to the number of employees and size of a firm directly impacts levels of productivity, wage and welfare within the organisation. Firms with at least 50 workers are subject to a number of additional regulations, which leads some firms to stay below the 50-worker threshold.

  8. Marginal product of labor - Wikipedia

    en.wikipedia.org/wiki/Marginal_product_of_labor

    The profit maximization issue can also be approached from the input side. That is, what is the profit maximizing usage of the variable input? To maximize profits the firm should increase usage "up to the point where the input’s marginal revenue product equals its marginal costs". So, mathematically the profit maximizing rule is MRP L = MC L. [10]

  9. Shapiro–Stiglitz theory - Wikipedia

    en.wikipedia.org/wiki/Shapiro–Stiglitz_theory

    In equilibrium, all firms pay the same wage above market clearing, and unemployment makes job loss costly, and so unemployment serves as a worker-discipline device. [3] A jobless person cannot convince an employer that he works at a wage lower than the equilibrium wage, because the owner worries that shirking occurs after he is hired.