Labour Market Flashcards
In the short run a firm will benefit from
increasing marginal returns beside as a firm takes on more workers output rises due to benefits from division of labour leading to an increase in marginal product but in the long run will result in diminishing returns
Individual demand for labour
Price of labour - a ride in wage rates which exceeds any rise in labour productivity will raise labour costs and will lead to a contraction in demand
Perfect competition
with perfect competition in the product market the firm becomes a price taker implying the price of its output does in change if it sells more, MR=P and the firm can sell all its output at the ruling price
Perfect labour market
firms can recruit workers at a constant wage rate and profit is maximised when the last worker adds more to revenue than cost
MRP
tends to ride at first and then fall
firms will not be maximising profit at the lowest level of employment as they may be able to higher more workers and generate a larger MRP that exceeds the cost of hiring them
High wages
When demand is high and supply is low and both are inelastic
Low wages
When supply is low and demand is high and both are elastic
Bargaining power BMA
if the BMA was to take industrial action there would be major consequences as there is little scope to replace speak posits with other factors of production
Esteem
some occupations are held in high public esteem as they are seen to provide an important service and being composed of people who are well qualified and have particular skills and talents
Help boost MRP
Discrimination
where groups of workers are treated differently to other workers in the same job regarding pay and employment
Those groups experiencing discrimination
experience greater difficulty finding work and may resort to taking less demanding jobs than they are qualified to do
Trade unions
will act as a monopoly seller of labour and bid up the new wage of its members from W1 to Wu which creates a new supply curve as no worker is prepared to work at a wage less than Wu
why is MC vertical in monopsony
as far as Qu the MC of employing another worker is one more wage (Wu) so the MC sits on top of the Supply curve and beyond this point even say will encourage new workers
