Supply and Demand part 3
Supply and Demand part 3 ECON 224 002
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This 4 page Class Notes was uploaded by Brianna Dwinnell on Tuesday October 13, 2015. The Class Notes belongs to ECON 224 002 at University of South Carolina taught by Elizabeth Marie Breitbach in Summer 2015. Since its upload, it has received 37 views. For similar materials see Introduction to Economics in Economcs at University of South Carolina.
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Date Created: 10/13/15
Supply and Demand Part 3 10132015 Product v Labor Demand 0 Product 0 Household demand 0 Businesses supply 0 Demand depends on price of product 0 Labor 0 Businesses demand 0 Households supply 0 Businesses want to pay lowest price Look at how much is price of product How productive are our workers That will determine how much demand we have 0 Demand depends on Productivity of laborhow productive are we as labors Price of the product it helps produce Derived Demand 0 Demand curve will be a downward slope The lower the wage the increase in quantity of labor demanded Yaxis is wages while Xaxis is labor Market Demand for Labor 0 What shifts the labor demand curve 0 Changes in product demand 0 Changes in productivity 0 Changes in the price of other resources Market Supply for Labor 0 Who supplies labor 0 Thinking of workers with similar skills and ability Compete forjobs Downward or upward sloping o UPWARD Purely Competitive Labor Market 0 Many employers competing for a speci c type of labor 0 pharmacy 0 Many workers with identical skills supply Individual employers and workers are quotwagetakers o Wage is determined IN THE MARKET Supply curve is upward sloping and demand is downward o More likely to work more hours at the best price 0 lncreasing a minimum wage might cause some people to not have employment Monopsony Similar to Monopoly Employer has buying power 0 Characteristics 0 Single buyer Small town One major bizfactory that everyone works for 0 Labor is relatively immobile o Firm is a wage maker 0 Wages are going to be lower than in a perfectly competitive market Craft Union Model Effectively reduces supply of labor 0 Restricts immigration o Reduces child labor 0 Enforces compulsory retirement 0 Enforces shorter workweek Need license of some sorts to enter market 0 Demand supply curve is going to DECREASE and REDUCE the supply of labor quantity of labor decreases and increase the new equilibriumhigher wage Application NFL 0 NFL has a monopoly on profession football in the US o If you want to watch a professional football game in person or in TV it will be an NFL game Product Market 0 NFL is a price maker they sell the price of tickets 0 They also set the price of their games to be viewed on TV o If you want any team clothingother accessories 0 Prices are above competition equilibrium NFLPrice Makers Labor Market 0 NFL is sole demander of professional football players 0 They are a Monopsony in the Labor Market 0 They are the quotwage makerquot 0 Buyers like low prices NFL sets the wage rate lower than if there were other buyers 0 No close substitutes o Otherjobs for professional football players have lower wages o Barriers to entry for buyers 0 Can new rms enter into the market to compete with NFL 0 There are no gov restrictions eliminating competition 0 Not an economies of scale problem 0 NFL does not own all of a resource 0 USFL o Came about for 3 main reasons Strike in NFL previous year Rise of Cable TV Increased demand for football 0 Challenged NFL as the quotfunquot league Fans charging the stadium Exciting plays and players Girls in bikinis in stands 0 Originally 12 cities signed up for USFL teams Nine of those already had NFL teams Six more teams were added in 1984 o Signed contracts to have games played on ABC and ESPN o In the rst year 10 of 12 exceeded the goal of x of tickets sold per game 0 Labor Market Wages o Claimed to be in bidding wars with NFL for players Hired players and coached from NFL 0 Signed big names Reggie white Jim Kelly turned down NFL 0 Increases demand for professional players Supply stays the same Wages yaxis and Quantity of Labor xaxis both increase Competition increase 0 NFL wages tripled within 3 years of USFL existence