3.5 Labour market Flashcards
3.5.1 A)
Define demand for labour
qty of labr that employers would wish to hire at each wage rate
3.5.1 A)
What is MRP
MRP is marginal revenue product, which is the extra revenue generated by an addition worker
3.5.1 A)
What is the significance for MRP
Determinds the dd for labour, ^MRP = ^dd for labour
3.5.1 A)
How can MRP be uneffective
Due to the law of diminishing marginal productivity means that workers are likly to be more productive at first and then fall off.
3.5.1 A)
Why is demand for labour downwards sloping
1) in the LR all factors of production vary, so high wage rate would encourage employeers to use machines instead of people
2) in the SR firms have fixed level of capital and due to law of diminishing marginal productivity, lower return per worker = v wage rate
3.5.1 A)
What is the formula for MRP
marginal output * price or change in total reveneue
3.5.1 A)
Factors that influence the demand for labour
Wage rates
Demand for the product
prices of other factors of production
wages in diff countries
tech
regulations
3.5.1 A)
Factors that influence the demand for labour
How does wage rates influence the demand for labour
Wages have same effect on dd for labour as price has on demand for a product. ^ wages = ^ dd for labour contracts. As MRP for labour must be high for it to be worthwhile to employ
3.5.1 A)
Factors that influence the demand for labour
How does Demand for the product influence the demand for labour
As dd for labour is derived from dd for the product.^ in dd for product = ^ dd for labour
3.5.1 A)
Factors that influence the demand for labour
How does prices of other factors of production influence the demand for labour
If machinery and equipment cheap, demand for labour falls
3.5.1 A)
Factors that influence the demand for labour
How does wages in diff countries influence the demand for labour
If wages are low in other countries, busniess may employ from those countries as it’s cheaper reducing busniess costs
3.5.1 A)
Factors that influence the demand for labour
How does tech influence the demand for labour
Improvement in tech leads to v need / dd for human labour. But demand for labour in tech industry rises
3.5.1 A)
Factors that influence the demand for labour
How does regulations influence the demand for labour
As regulations made some jobs are no longer needed and some new jobs are made. High regualations may discourage firms employing.
3.5.1 B)
What condition of demand is demand for labour
Derived demand, this is because firms hire workers to meet output / profit goals. Therefore an ^ in dd for the product leads to ^ dd for the labour of that product.
3.5.1)
What is price elastacity of demand of labour
Responsivness of the qty dd of labour to wage rate
3.5.1)
factors that influence PED of labour
1)Ped of the product
2)Proportion of wages to total cost of product ( ^ % ^ elastic)
3)subsitute machinery and labour in other countries (^ = ^elastic)
4) LR ^ elastic visa versa
3.5.2 A)
What is supply of labour
The ability and willingness of people to make themselves advailable to work at diff wage rates.
3.5.2 A)
Factors influencing ss of labour
wage
population
non-monetary benifits
education / training
trade unions / barriers to entry
wage and conditions
legislations