So far we've only considered factor markets in which neither suppliers nor demanders hold any market power in the factor market. The discussions in the section on Factor Markets presume that, even if the firm is a monopolist in its output market, it purchases inputs in a competitive market. In other words it is a price taker in hiring factors.

    The same is true on the labor side. Even if a worker had considerable skills and training it is assumed she sells her labor in a competitive market in which she had no market power other than her skills. In other words she too was a price taker.

    Without market power neither firms nor individuals can affect market price or shift market demand or supply curves by their choices.

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