Labour Demand Flashcards
What is the marginal product of labour?
It is the change in output resulting form hiring an additional worker, holding constant the quantities of all other inputs
What is marginal product of capital?
It is the change in output resulting from a one-unit increase in the
capital stock, holding constant the quantities of all other inputs.
What does the total product curve describe?
It describes what happens to output as the firm hires more workers
What is the shape of the total product curve?
It is upward sloping
What does the marginal product curve represent?
It gives the output produced by each additional worker
What does the average product curve represent ?
It gives the output per worker
What law implies the assumption that the marginal product of labour eventually declines?
The law of diminishing returns
What does the law of diminishing returns imply?
The law of diminishing returns then implies that the monetary gains from hiring additional workers eventually decline.
The position of the labour demand curve depends on what?
The price of the output
