Micro: The Labour Market Flashcards
1
Q
What type of demand is demand for labour a form of
A
The demand for labour is a form of derived demand
2
Q
What is a derived demand
A
A demand resulting from demand for something else
3
Q
What happens to demand for labour when the demand for a product increases
A
If the demand for a product increases, the demand for labour needed to produce the products will increase
4
Q
When is labour employed
A
Labour is only employed if they provide a net benefit to the firm
5
Q
What is the marginal revenue product
A
The marginal revenue product (MRPL) is the additional revenue from hiring one more worker
6
Q
Where is it useful for firms to continue hiring up to
A
It is useful for the firm to continue hiring up until the MRP from the last labour input is equal to the marginal cost
