ECON101 Lecture Notes - Lecture 33: Retained Earnings, W. M. Keck Observatory, Monopsony

• School: University of Alberta
• Department: Economics
• Course: ECON101
• Professor: Gordon Lee

Document Summary

Organization that seek to secure employment improvements for their members. When collective bargaining fail => strike ( union initiates action ); lockout ( management initiates action ). A market where there is only one buyer. Consider an input market that is a monopsony. The monopsonist faces the upwards sloping supply curve. Factor cost = expenditure = w(l) * l dexp/dl = l(dw/dl) + w(dl/dl) Mfc = l(dw/dl) + w dw/dl = slope of the supply curve > 0. Step 1: firm decides to enlarge its stock of capital. Step 2: firm raises funds to finance the expansion. Step 3: firm uses these funds to hire the capital. After investment is complete, the firm ends up with a larger stock of capital. Sources of financial capital: government subsidies, retained earnings, loans from banks, investors ( this comes from household , sale of stocks ( also comes from household )