3.5.1 - Demand for labour

Question 1

Demand for labour diagram

Answer 1

Question 2

Factors affecting demand for labour

Answer 2

Question 5

The demand curve for labour - MRP theory

Answer 5

1. Increasing MRP (Initial Stage):
   • At first, as more workers are hired, MPP (Marginal Physical Product) increases due to specialization and division of labour.
   •This leads to a rise in MRP, a rise in MRP may mean firms are willing to pay more for additional workers.
2. Due to the Law of marginal Diminishing returns (after a Certain Point):
   • Eventually, fixed factors of production (e.g., capital, space, machinery) become constraints.
   • Workers have to share limited resources, leading to overcrowding and inefficiency.
   • This reduces MPP, which in turn lowers MRP.
   3.MRP Curve Shape:
   • Rises initially due to increasing MPP.
   • Peaks at the most efficient level of labour employment.
   • Declines as diminishing returns set in, reducing productivity and revenue from each additional worker.
   link

Question 6

Draw a demand curve’s for when labour is elastic and inelastic

Answer 6

Question 7

What factors affect the PED of labour

Answer 7