Micro Flashcards
What is Derived Demand?
Demand for a good, which is a consequence for the demand for something else.
Marginal Physical Product of Labour?
The addition to a firm’s total output brought about by employing one more worker.
Demand for Labour is….
related to how productive labour is and how much the product is demanded.
Demand for labour is affected by…
Wage rate, Demand for products, productivity of labour, substitutes for labour, how profitable the firms are, number of firms in the market.
Marginal productivity theory…
is calculated by Marginal Product x Marginal Revenue
Determinants of the elasticity of demand for labour…
Wage rate, level of employment, substitutes, inelastic demand for labour.
Factors that influence the supply of labour to a particular occupation…
Wage rate, demographics, migration, advantages of work, leisure time, trade unions, taxes and benefits and training.
What is the Labour Market?
A factor market, where supply is determined by those who want to be employed, and demand is from employers.
Labour market equilibrium…
Where the supply of labour and the demand for labour meet.
What is Monopsony power?
When there is only one buyer of labour in the market. Firm has ability to set wages.
Determination of wage rates and levels of employment in imperfectly competitive markets…
Monopsony power, Trade unions, imperfect information.
Advantages of trade union…
More flexible labour market, increase job security, increase wages.
Disadvantages of trade unions…
Can cause unemployment, higher wages causes surplus, higher costs of production, substitution
National Minimum Wage…
Example of minimum price above free market price. Means firms have to pay their employees at least a certain wage.
Advantages of a National Minimum Wage…
Greater equity, distribution of income between high paid and low paid narrowed, reduce poverty, unemployed encouraged to join the labour market.
