3.5.1 Demand for Labour

Question 1

What is the definition of demand for labour

Answer 1

How many workers an employer/business is willing + able to hire at a given wage rate at a given time period

Question 2

What influences the demand for labour

This does what to the demand curve

Answer 2

It is an inverse relationship between demand for labour and wage rate

It cases shits along the demand curve

Question 3

If wages are lower

Answer 3

Labour is cheaper than capital, creating a substitution effect

More people are employed

Question 4

Shifts in labour demand are caused by …..

Answer 4

factors other than changes in wage rate

Question 5

What causes shifts along the demand curve

Answer 5

• Rise in consumer demand and business wants to increase their supply - derived demand
• Changes in prices of a product, affecting a businesses revenue
• Increased labour productivity - labour is more cost-efficient than capital
• Employment taxes or subsidies
• Changes in prices of new capital equipment

Question 6

Explain what derived demand is

How does this link to economic cycles

Answer 6

is demand for a factor of production used to produce another good or service

When the economy is growing strongly, many businesses look to hire extra workers to supply increased output

During a recession/economic slowdown demand for labour tends to fall causing a rise in cyclical unemployment