Characteristics of a perfectly competitive labour market

• What topic do these two videos discuss?

  Wage determination in a perfect labor market
• Why is understanding the characteristics of a perfectly competitive labor market important?

  To understand wage determination in such a market
• What are the characteristics of a perfectly competitive labor market similar to?

  A perfectly competitive product market
• In a perfectly competitive labor market, what is the assumption regarding the number of workers and employers?

  A large number of both
• What does it mean for labor to be 'homogeneous' in this context?

  There is no difference in skills
• What does perfect labor mobility imply in a perfectly competitive labor market?

  Workers can take any job
• What information do workers have in a perfectly competitive labor market?

  The going wage rate
• In a perfectly competitive labor market, what information do firms possess?

  Skills and productivity of all workers
• What does it mean for firms to be 'wage takers'?

  They have no control over wage
• Where does the wage rate come from in a perfectly competitive labor market?

  Where demand equals supply
• Why is there no incentive for firms to offer a higher wage rate?

  All workers are homogeneous
• In a perfectly competitive labor market, what is the relationship between the wage rate and the MRP of workers?

  The wage rate equals the MRP
• Why can't workers demand a higher wage in a perfectly competitive labor market?

  Firms will employ someone else
• Why is there no incentive for firms to offer a wage rate below the equilibrium?

  Workers will go to another firm
• What are the barriers to entry and exit for workers in a perfectly competitive labor market?

  No barriers
• Why is studying perfectly competitive labor markets useful, even though they're extreme?

  It's a benchmark for real markets
• What does it imply if wages are very different from perfectly competitive labor markets?

  There may be market imperfections
• What should you watch in the next video?

  Wage in a perfectly competitive market
• What is MRP an acronym for?

  Marginal revenue product
• In the context of perfect information, what does a worker know?

  What the going wage rate is
• What must firms do with the wage rate determined by market supply and demand in a perfectly competitive market?

  Offer that wage to workers
• What happens if a firm pays a wage higher than the worker's marginal revenue product (MRP) in a perfectly competitive market?

  It costs the firm more