Factor Market article.gif (1381 bytes)

ninjin03.gif (583 bytes)MRP and VMP

 Pt3.gif (140 bytes) Definition ( + formula )

-Differences

-Shape of the curves

Pt3.gif (140 bytes) Wealth maximization condition for employing factor input

Pt3.gif (140 bytes) Individual factor demand curve : MRP curve below the maximum of ARP curve

Pt3.gif (140 bytes) Market factor demand curve is less elastic because of the change in product price

Pt3.gif (140 bytes) Backward bending individual labour supply curve : substitution effect < income effect ; leisure is a normal good

Pt3.gif (140 bytes) Upward sloping market labour supply

 

 

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