Labour markets and elasticity Flashcards
1
Q
what is elastic labour demand?
A
a wage change leads to a relatively large change in demand
2
Q
what is inelastic labour demand?
A
a wage change leads to a relatively small change in demand
3
Q
what is labour demand elasticity?
A
measures the responsiveness of labour demand following a change in the wage rate
4
Q
what affects labour demand elasticity?
A
- ped of the final good
- time
- ease and cost of factor substitution
- proportion of labour costs compared to fixed costs
5
Q
what factors affect labour supply elasticity?
A
- time
- sense of vocation
- qualifications
6
Q
what is labour supply elasticity?
A
measures the responsiveness of labour supply to a change in the wage rate
7
Q
what is marginal revenue product?
A
the extra revenue generated when an additional worker is hired (if we assume that firms are profit maximisers, they will only hire extra workers if that means extra revenue will be generated)
