10–13% of the AP exam. Key topics: Derived demand for factors of production, Marginal revenue product (MRP) = marginal product × price (or MR) in competitive output markets, Value of marginal product (VMP) in perfectly competitive output markets, MRP as the firm's demand curve for labor, Labor market equilibrium: wage and employment determination under competition, Shifts in labor demand and labor supply; effects on equilibrium wage and employment, Monopsony: single buyer of labor, marginal factor cost (MFC) curve above labor supply, Monopsony equilibrium: below-competitive wage, fewer workers employed, deadweight loss, Land and capital markets (brief coverage).
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