In a perfectly competitive market, an increase in market price shifts the marginal revenue curve9/20/2023 Once the wage in a particular market has been established, individual firms in perfect competition take it as given. Wages are determined by the intersection of demand and supply. Supply in a particular market depends on variables such as worker preferences, the skills and training a job requires, and wages available in alternative occupations. The supply curve for labor depends on variables such as population and worker preferences. We add the demand curves of individual firms to obtain the market demand curve for labor. We have seen that a firm’s demand for labor depends on the marginal product of labor and the price of the good the firm produces. Describe the ways that government can increase wages and incomes.Describe the forces that can raise or lower the equilibrium wage in a competitive market and illustrate these processes. Explain and illustrate how wage and employment levels are determined in a perfectly competitive market and for an individual firm within that market.
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