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Labour Markets
Fichas del conjunto (11)
- 1Derived DemandThe demand for factors of production, such a labour, is derived from the demand for the product they are used to make.
- 2Marginal productivity theoryThe demand for labour is also known as the theory of marginal revenue productivity. This is because a firm's demand for labour depends on the productivity of additional units of labour, known as the marginal physical product multiplied by the selling price of the product.
- 3Marginal revenue product (MRP)The addition to a firm's revenue from employing an additional unit of a factor of production, usually labour.
- 4Marginal physical product (MPP)The addition to output from employing an additional unit of a factor of production, usually labour.
- 5Demand curve for labourUsually referred to as the MRP, shows the relationship between the wage rate and the number of workers employed. Equal to the MPP in the labour market multiplied by the MR obtained in the market for the firm's product.
- 6Determinants of labour demand: wage ratesWage rates: as wages are the price of labour, higher wages will lead to a contractionary movement along the demand curve for labour.
- 7Determinants of labour demand: labour productivityLabour productivity: as the output per worker per hour increases, this makes them more valuable to an employer and will lead to an increase in demand for labour.
- 8Determinants of labour demand: the price of substitute factorsIf for example, capital equiptment becomes cheaper, this will lead to a reduction in demand for labour, as seen in the market for supermarket checkout assistants.
- 9Determinants of labour demand: other labour costsOther labour costs: these include employers national insurance and pension contributions. If these increase, demand for labour will fall.
- 10Elasticity of demand for labourThe measure of the responsiveness ofthe quantity of labour demanded following a change in the wage.
%change in quantity of labour/% change in wage rate - 11Determinants of elasticity of demand for labour: ease of substituton
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- A level Economics Fichas sobre Labour Markets, creado por Oliver Philpott el 09/02/2017.
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- Oliver Philpott
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