Labour Demand Flashcards
Who demands and supply’s labour?
Firms/employers demand labour
Individuals supply labour
What does the demand curve for labour show?
Show how many workers will be hired at any given wage rate over a given period of time
What type of demand is labour?
Derived demand
What does the derived demand in this context mean?
When the demand for goods and services are the high the de,and for labour will be high.
What is the MRP?
Extra revenue generated when an additional worker is hired
What is the MRP formula?
MRP= MPP X MR
What can increase MRP?
Increased specialisation
Increase excess land and capital resources
What can decrease MRP?
Constraints of the fixed factors of production of capital and land
If the wage rate is constant what is it equal to
The marginal cost of labour
Why will firms not hire more workers after the MRP= wage?
MC will be higher than MR, the worker will cost more to the firm than it will bring in revenue.
Why the firm will not underhire?
Cause the workers have the ability to bring in more revenue than costs
