Chapter 7 The Labour Market : Demand And Supply Flashcards
Define derived demand
Occurs when D for a factor of production arises from the D for the output it produces
What sort of demand is labour
Labour is derived demand
MRP
The value of the physical addition to output arising from hiring one extra unit of a factor of production.
Marginal product of labour
The change in total output arising from hiring one more worker
Elasticity of demand for labour
The responsiveness of quantity demanded of labour to a change in the wage rate
Economically inactive
Percentage of the population who are either not in work nor seeking it
Participation rate
Percentage of the population of working age currently in work or actively seeking it.
Monetary factors
The financial rewards to a particular occupation,for example, wage, commision,bonus.
Non monetary
The non financial rewards to a particular occupation, for example, holidays, leasure time and convenience
Unemployment
The number of people of working age who do not currently have a job but are actively seeking work at existing wager rates.
Elasticity of supply of labour
The responsiveness of quantity labour supplied to a change in the wage rate
Income effect
Depending upon an individual’s target level of income, he or she can work fewer houses for the same overall pay.
Substitutions effect
Individual will tend to choose to work for more hours, as the opputunity cost leisure increases.
