• In this type of market...
  - Numerous firms compete with one another to hire a specific type of labor
  - Each of many qualified workers with identical skills supplies that type of labor
  - Individual firms and individual workers are "wage takers;" neither exerts control over the market wage rate

Market Demand for Labour

• market labor demand curve for a particular labor service is the horizontal sum of the labor demand curves of the individual firms

Market supply of Labor (assuming that workers individually compete for jobs)

• Upward sloping: employers must pay more to attract more workers from:

• other jobs

• from unemployment

Labour Market Equilibrium

• equilibrium wage rate and level of employment in PC labor market = intersection of market labor D curve and market S curve
• each individual firm finds it profitable to hire this type of labor up to point at which MRP = MRC
• The area under the demand curve represents the total costs