Labour Markets Flashcards
How do you calculate MRP (Marginal Revenue of Product)?
Marginal Physical Product x Marginal Revenue
What is the Marginal Physic Product of labour?
The amount of extra product an extra labourer will make
What is marginal revenue?
Marginal revenue is the extra revenue from selling one extra unit
What will happen to workers and firms when wages increase?
Workers will supply more labour and firms will demand less labour
What does elasticity of demand for labour tell us?
How responsive demand for labour is to changes in wages
What is a monopsony?
When there is only one buyer in the market
Example of monopsony
NHS - Only firm buying doctors so they are able to make nhs wages low
How do monopsony’s maximise profits?
They are able to lower their wages/prices as they are the only ones buying in the market and thus mean they can reduce their costs and then maximise profit
What is demand for labour equal to?
Marginal revenue product
What is supply equal to in a monopsony diagram?
Average cost of labour
What is the marginal cost of labour?
The cost of one additional labourer. In the monopsony diagram it is twice as steam as the supply curve
What is a reason for different wages
Elasticity of labour and MRP of labour
An example of a trade union
The NUT - The national union of teachers
