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## Microeconomics

### Course: Microeconomics>Unit 8

Lesson 1: Introduction to factor markets

# How many people to hire given the MPR curve

Given that hiring more workers gives more revenue, but also has additional cost, what is the optimal amount of labor to hire? We begin thinking about this as well as briefly discuss another type of competition: monopsony labor markets.  Created by Sal Khan.

## Want to join the conversation?

• So Marx was right?. The firm captures the surplus produced bu all but the marginal labor unit. Is this why the 99% feel something is rotten someplace. I'm 77 years old ans enjoy learning from the best site on the web--Khan Academy a revolution in worldwide education. Bless you.
• Why would any entrepreneur risk his life savings on a business venture if there was no benefit for him to keep. They also incur far more costs then just the price of labor. There is nothing stopping the labor market from becoming entrepreneurs and keeping that benefit. It's not all so black and white.
• So the final answer for how many workers to hire is 3 or 4? I was taught to set MC=to MPL is that incorrect? If I did that than the answer is 4 but it seemed like the video was stating that 4 wouldn't make sense because you would gain \$10 but also lose \$10 from having to pay the worker
• So what's a good example of a monopsony? I'm thinking a government in certain situations?
• The explanation above is great, but the question asked what a monopsony is, not a monopoly. A monopsony is when there is only one firm to work for for people of a certain profession. For example, if a coal miner were to move to a small town with only one operating coal mine, then that coal mine would have a monopsony over the labor market in that town. Hope this helped.
• Why do we include the Area above the and below and NOT just below?
• The area below the marginal benefit curve is the amount of revenue gained from hiring all those people. The area below the marginal cost curve is the cost of hiring all those workers. Since you are trying to find how much this profits you, you need to find the area below the marginal benefit curve but above the marginal cost curve.
• Wouldn't it be a good idea to hire the fourth person just to give an impression to the public that your business is trustworthy and well?
• Most consumers care only about the product, not how long your employees work.
• I was actually trying to find tutorials on theory behind union membership and labor Market, but couldn't find it. I've used the search tool to find the topic but all it directed was into labor and MPR. Do you have any tutorials on Union and labor market?
• How is the MPR curve the demand curve of the firm?
• Let's review what the demand curve is. As an example I take the apple market.
How many kilos of apples would people buy if the price is \$2 per KG? 1.000 KG. How about \$1.50? 2.000 KG. And \$1? 3.000 KG. And \$0.50? 4.000 KG. Now connect these points and you have the demand curve.

Now almost the same with the MPR-curve of this car wash.
How many workers would the car wash hire if the price per person per hour is \$25? 0.5 person. How about \$20? 1.5 person. And \$15? 2.5 person. And \$10? 3.5 person. Connect all the points and you have the MPR-curve.

Notice the questions that are asked are almost the same?
• For a nonprofit would it not make sense to definitely hire a 4th person full-time?
• If the employees of the nonprofit firm are volunteers who work for free, the marginal costs curve will be at 0. The marginal revenue curve would then only intersect the marginal costs curve at people per hour = 5. That would mean it would not only make sense to hire a 4th person, but also a 5th.