00:01
So here we've got some economic principles questions, right? and the first one says, is asking us about labor supply.
00:09
So i'm going to draw an upward slope and labor supply curve, right? and a labor supply curve is drawn between the wage and the amount of labor, right? and if this is the supply curve, what's going on is that as the real wage increases, right? for example, from here up to here, the amount of labor is increasing, right? so here you've got actually real wage up is leading to more work.
00:41
And if you are working more, you are taking less leisure, right? so this one is false, right? it's the other way around.
00:51
An upward sloping curve says, as the real wage increases, you supply more labor.
00:55
And if you're working more, you are taking less leisure, right? b, we are thinking about profit, right? we are thinking about profit, which is equal to revenue minus costs.
01:08
So the change in profit is equal to the change in revenue minus the change in cost, which is what an economist would call marginal revenue minus marginal cost.
01:21
So if we want to maximize profit, right, if we think about this, graphically about say quantity and profit.
01:31
If we want to maximize profit, we want to do where the change in profit is equal to zero, right? at the top of the profit function, the slope, the change in profit is gonna be equal to zero.
01:42
So we wanna set this equal to zero, which means we wanna set marginal revenue is equal to marginal cost.
01:48
So yes, this is absolutely true...