# Chapter Ten: Wage Determination

### Chapter Ten: Wage Determination

10.1 Changing Paradigm: From Output Market to Input Market (02:20)
This clip introduces the resource markets that will be the focus of this chapter.
Transcript

10.2 Marginal Revenue Product of Labor (04:11)
This clip introduces the concept of marginal revenue product (MRP) of labor and numerically shows how to compute the MRP. The difference between MRP and marginal revenue (MR) is clarified.
Transcript

10.3 Marginal Resource Cost of Labor for a Wage Taker (02:26)
This clip introduces the concept of marginal resource cost (MRC) of labor which equals the prevailing wage rate for a wage-taking firm. The difference between MRC and marginal cost (MC) is clarified.
Transcript

10.4 Profit-Maximizing Rule for Labor Hiring (02:42)
This clip introduces the profit-maximizing rule for labor hiring: MRP = MRC. The difference between profit-maximizing labor hiring (MRP = MRC) and profit-maximizing output quantity (MR = MC) is elucidated.
Transcript

10.5 Labor Demand Schedule in a Competitive Labor Market (02:03)
This clip explains why the marginal revenue product curve of labor is the labor demand curve of a wage-taking firm.
Transcript

10.6 Labor Demand Shifter #1: Product Demand (01:38)
This clip explains how a change in the demand for a product that a type of labor helps produce affects the demand for the labor.
Transcript

10.7 Labor Demand Shifter #2: Labor Productivity (02:22)
This clip explains how a change in labor productivity affects the demand for the labor.
Transcript

10.8 Labor Demand Shifter #3: Prices of Substitute Inputs (03:17)
This clip discusses the substitution and output effects on labor demand when there is a change in the price of an input that is substitutable for labor.
Transcript

10.9 Labor Demand Shifter #4: Prices of Complementary Inputs (02:06)
This clip discusses the output effects on labor demand when there is a change in the price of an input that is complementary for labor. Since the two inputs are complementary, there is no substitution effect.
Transcript

10.10 Wage Elasticity of Labor Demand (02:28)
This clip introduces the concept of wage elasticity of labor demand and shows that the effect on a firm’s wage payment from a change in wage rate depends crucially on whether the demand for labor is elastic or inelastic with respect to wage.
Transcript

10.11 Factor Affecting Wage Elasticity: Resource Substitutability (01:44)
This clip explains why and how the degree of substitutability between labor and other inputs can affect firms’ wage elasticity of demand for labor.
Transcript

10.12 Factor Affecting Wage Elasticity: Product Demand Elasticity (02:05)
This clip explains why and how the elasticity of demand for the product in which labor helps produce can affect firms’ wage elasticity of demand for labor.
Transcript

10.13 Factor Affecting Wage Elasticity: Ratio of Labor Cost to Total Cost (02:14)
This clip explains why and how the ratio of labor cost to total cost of production can affect firms’ wage elasticity of demand for labor.
Transcript

10.14 Wage Determination and Optimal Labor Hiring in a Competitive Labor Market (01:44)
This clip explains how the market wage rate is determined in a competitive labor market, and how an individual wage-taking firm decides its profit-maximizing labor hiring.
Transcript

10.15 Wage Determination and Optimal Labor Hiring in Monopsony (03:39)
This clip explains how a monopsony determines its profit-maximizing labor hiring and the wage it pays.
Transcript

10.16 Profit Maximization: Monopoly vs. Monopsony (03:54)
This clip contrasts the monopoly model discussed in chapter eight and the monopsony model discussed here. The comparison makes clear the mirror images of the two profit-maximization models: output space vs. input space.
Transcript

10.17 Union Models: Introduction (1:32)
This clip provides a brief introduction to the union models to be discussed.
Transcript

10.18 Craft Unions (3:34)
This clip explains how an exclusive union can restrict labor supply and, thus, affect labor wage and employment for its members.
Transcript

10.19 Industry Union (03:52)
This clip explains how an inclusive union can make wage demands and, thus, affect labor wage and employment for its members.
Transcript

10.20 Effects of Unions on Wage and Employment (01:26)
This clip details the effects of exclusive and inclusive unions on wage and employment.
Transcript

10.21 Explaining Wage Differentials (04:56)
This clip identifies major causes for wage differentials among individuals and occupations, considering both the supply-side and demand-side factors.
Transcript

10.22 The Minimum Wage Controversy (3:19)
This clip provides a brief debate on the effect of minimum wage regulations on labor employment. In particular, it shows that the imposition of a binding minimum wage can cause labor employment to decrease or increase, depending on whether the labor market is competitive or monopsonitic.
Transcript