3 The Demand for Labor

Table 3.1

Figure 3.1 Demand for Labor in the Short Run (Real Wage)

Table 3.2

Figure 3.2 Demand for Labor in the Short Run (Money Wage)

Figure 3.3 Effect of Increase in the Price of One Input (k) on Demand for Another Input (j), Where Inputs Are Substitutes in Production

Figure 3.4 The Market Demand Curve and Effects of an Employer-Financed Payroll Tax

Figure 3.5 Payroll Tax with a Vertical Supply Curve

3A Graphical Derivation of a Firm’s Labor Demand Curve

The Production Function Q = f (L, K) Figure 3A.1: A Production Function

Figure 3A.2 The Declining Marginal Productivity of Labor

Figure 3A. 3 Cost Minimization in the Production of Q Figure 3A.3 Cost Minimization in the Production of Q* (Wage = $10 per Hour; Price of a Unit of Capital = $20)

Figure 3A. 4 Cost Minimization in the Production of Q Figure 3A.4 Cost Minimization in the Production of Q* (Wage = $20 per Hour; Price of a Unit of Capital = $20)

Figure 3A.5 The Substitution and Scale Effects of a Wage Increase