T6 = Marginal revenue product theory Flashcards
What is dervived demand
Demand for x affecting demand for y
What si marginal revenue product of labour
The additional revenue from hiring oen more unit of labour
What is marginal product of labour
Change in total output from hiring oen mroe worker
What does demand for labour depeend on
Expectation
Cost of labour
Productivity
Price of other facors of production
Supplementary costs
What is the marginal rpductivity thoery
That the demand for workers depends on MRP
Where is the general equilibirum
MC = MRP
How is mrp calculated
MP X MR
Problems with mrp theory
Measuiring efficiency cna be hard
Collaboritve workers make it hard to measure indiviudal productivity
Many products are teh result fo many inputs
Many people have the baility to set there own pay
What wil an increase in wage rate lead to
Fall in quantity of labour
What is the elasticity fo demand for labour
Repsponsiveness of demand for laboru in respect to wage rate
Factors affecting EoD for labour
Time
Subs
Elastcity for the product
Proportion of total costs
In capital intensive industries what will the demand for laboru be
inelastic, due to wage cost beign a small prop of tota
what will demand for laboru be in laboru inetnsive industry
elastci due to it beign a great prop fo total costs
who demands workers
firms
why may demand for low skilled jobs be inelastic
when there are few susbtitues available, such as capital or other unemployed workers
