LABOUR MKT - elasticity of labour demand

Question 1

what does elasticity of labour demand measure

Answer 1

responsiveness of laobur demanded given a change in wage rate

Question 2

what does a wage elastic demand curve mean

Answer 2

the proportionate vhange in labour demand is greater than the change in wage rate

Question 3

draw a elastic labour demand curve

Answer 3

title
labelled axis
curve labelled

should be shallow

Question 4

what does inelastic labour demand curve men

Answer 4

proportionate change in labour demand is less than change in wage rate

Question 5

draw an inelastic labour demand curve

Answer 5

title
axis labelled
curve labelled

shoud be steep

Question 6

what is acronmy for 4 jey determinants of labour demnd elastitcty

Answer 6

S ubstitutability
E lastitcity
C ost
T ime

Question 7

what does S stand for

Answer 7

substitutability of capital for labour

Question 8

the more substitutable capital is for labour ..

Answer 8

the more elastic labour demand will be

Question 9

what happens if wages rise and there’s a high substitutability of labour for capital

Answer 9

firms wont hire as many workers
sack more workers
as bring in capital to substitute for them

Question 10

if capitatl is highly subsitutable for laobur describe proprtionaloity whenwages rise

Answer 10

proportional decrease in labour demanded is much higher than the increase in wages

Question 11

explain what happens when wages rise and capital isnt very susbsitiuable for labour

how easy

elasticty

Answer 11

even though wages increase firms not able to reduce workers by very much as not substitutes out there

its difficult to substitiute

so demand for labour wage is inelastic

Question 12

what does E stand for

Answer 12

Elasticty of demand for final product

Question 13

If elasticity of demand for final product is inelastic and wages go up how will firms not respond

Answer 13

not gonna respond by cutting workforce significantly i,e proprtionatley less change in labour demand

Question 14

why if firm has inelasttic demand product they wont cut workforce

Answer 14

can pass on high costs from higher wages via higher prices

Question 15

the more price inelastic demand for the final product

Answer 15

the more wage inelastic Labour demand

Question 16

what does C stand for

Answer 16

Cost of labour as a % of total costs

Question 17

the greater the labour cosgs are as a % of TC the more ….

Answer 17

wage elastic demand will be

Question 18

why is The greater that labour costs are as a % of TC the more wage elastic demand labour demand gonna be

Answer 18

As wages go up firms think TC increased massively so need to cut my workforce to maintian prfits

Question 19

in terms of proportionality what happens if labour costs are as a % of TC are high

Answer 19

labour demand is elastic

so LD reduces proportionately more than the rise in wage

Question 20

the more insignificant LC as a % of TC the more wage

Answer 20

inelastic labour demand will be

Question 21

what does T stand for

Answer 21

Time Period

Question 22

In LR all fop are variable so in the LR easier to bring in capital for a firm meaning labour demand becomes more

Answer 22

wage elastic

Question 23

in the SR how hard is it to increase capital

Answer 23

difficult

Question 24

in SR difficult to increase capital therefore labour demand is

Answer 24

more wage inelastic