AP Microeconomics / Unit 5: Factor Markets
5.2 Changes in Factor Demand and Factor Supply
Notes
Labor demand shifts with product demand, product price, productivity and prices of other inputs.
- Labor supply shifts with population, preferences, and other job opportunities.
Practice
Workers become more productive with new training. Labor demand:
Higher MRP.
The product's price falls. Demand for workers who make it:
Lower MRP.
More people entering a profession shifts labor supply:
More workers.
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