5.1-Demand for labour Flashcards
What is the definition of demand for labour?
The demand for labour refers to the quantity of labour that employers are willing and able to hire at a given wage rate.
True or False: The demand for labour is a derived demand.
True
What factors can shift the demand curve for labour?
Factors include changes in the demand for goods and services, changes in technology, and the price of capital.
What is the relationship between wage rates and the quantity of labour demanded?
There is an inverse relationship; as wage rates increase, the quantity of labour demanded typically decreases.
Fill in the blank: The demand for labour is influenced by the ______ of the products that the labour helps to produce.
demand
What is meant by marginal revenue product (MRP) of labour?
MRP of labour is the additional revenue generated from hiring one more unit of labour.
How is the MRP of labour calculated?
MRP is calculated by multiplying the marginal product of labour by the price of the output.
What is the significance of the MRP in the demand for labour?
Employers will continue to hire workers as long as the MRP of labour is greater than or equal to the wage rate.
True or False: A decrease in the price of the final product will lead to an increase in the demand for labour.
False
What does the term ‘substitutes for labour’ refer to?
Substitutes for labour are alternative resources, such as machinery, that can perform the same functions as workers.
What is the effect of technological advancements on the demand for labour?
Technological advancements can either increase or decrease the demand for labour, depending on whether they complement or substitute for human labour.
Fill in the blank: The elasticity of demand for labour measures the _______ of labour demanded in response to a change in wage rates.
responsiveness
What factors affect the elasticity of demand for labour?
Factors include the availability of substitutes, the proportion of total costs represented by labour, and the time period considered.
True or False: The demand for skilled labour is usually more elastic than the demand for unskilled labour.
False
What is the impact of a minimum wage on the demand for labour?
A minimum wage can lead to a decrease in the demand for labour if it is set above the equilibrium wage.
What is the difference between short-run and long-run demand for labour?
In the short run, firms may not be able to adjust all inputs, while in the long run, firms can adjust all factors of production.
What role does the labour market play in the economy?
The labour market facilitates the interaction between employers looking for workers and individuals seeking employment.
Fill in the blank: When the demand for a product increases, the demand for labour to produce that product will ______.
increase
What is the concept of ‘labour market equilibrium’?
Labour market equilibrium occurs when the quantity of labour supplied equals the quantity of labour demanded.
True or False: A surplus of labour occurs when the quantity supplied exceeds the quantity demanded at a given wage rate.
True
What is the effect of a labour shortage on wage rates?
A labour shortage typically leads to an increase in wage rates as employers compete for workers.
What is the significance of the supply curve in the labour market?
The supply curve indicates the relationship between wage rates and the quantity of labour that workers are willing to supply.
Fill in the blank: The demand for labour is generally more elastic in the ______ run than in the short run.
long
What is a ‘backward-bending labour supply curve’?
A backward-bending labour supply curve illustrates that beyond a certain wage level, higher wages may lead to a decrease in the quantity of labour supplied.
