3.5.2 Elasticty Of Labour Supply

Question 1

What is elasticity of labour supply?

Answer 1

• measures the extent to which labour supply responds to a change in the wage rate in a given time period

Question 2

What is wage elasticity of labour supply?

Answer 2

• is the sensitivity of the supply of labour to a change in the wage rate

Question 3

Ways that can effect the elasticity of labour supply

Answer 3

• specific skills and educational requirements = more complicated the skills = more inelastic
• role has a significant vocational aspect = less sensitive to changes in pay = more elastic
• time period = short run = more inelastic
• when labour is geographically and occupationally mobile, the labour supply will tend to be relatively elastic

Question 4

What is Marginal costs of labour?

Answer 4

• the marginal costs of employing labour is the change in total labour costs from employing one extra labour