5.1 Demand For Labour Flashcards
What determines the supply and demand for labour
The supply of labour is determined by those who want to be employed (the employees)
The demand for labour is from employers
What is meant by labour being derived demand
This means that the demand for labour comes from the demand for what it produces
For example demand for people who makes cars is derived from the demand for cars
What is labour demand linked to
How productive labour is and how much the product is demanded
What is the elasticity of labour linked to
How price elastic the demand for the product is
What is meant by nominal wages
This is the monetary value of wages
What is meant by real wages
This is wages adjusted for inflation
What affects the demand for labour
The wage rate
Demand for products
Productivity of labour
Substitutes for labour
Profitability of the firm
Number of firms in a market
Why is the demand curve for labour downward sloping
When wages get higher, firms might consider switching to capital production to lower costs
How can elasticity of the demand for labour impact wage rates and level of employment
Inelastic labour demand means no close substitutes meaning potential strikes will increase wage rate and not lower employment levels
What can affect market wage rate changes
How much labour costs as a proportion of total costs
How easy it is to find substitute factors
PED of the product
What is meant by productivity and how can it be increases
It is the output per worker per period of time
Can be increased by training workers or using advanced capital machinery
What is meant by unit labour costs
How much labour costs per unit of output
