Micro 25 - Supply and Demand for labour

Question 1

What are the four conditions that the elasticity of demand for labour depends on?

Answer 1

1- The proportion of labour costs of the total costs of a business
2- The price elasticity of demand for the final output produced by a business
3- The ease and cost of factor substitution
4- The timer period under consideration

Question 2

What are the five factors that the elasticity of supply of labour depends on?

Answer 2

1- Skills and qualifications
2- The levels of unemployment and underemployment in the industry
3- Geographical mobility of labour
4- Sense of vocation (non-pecuniary benefits)
5- The time period under consideration

Question 3

What is the market clearing wage rate?

Answer 3

The market clearing wage rate is the wage rate at which the quantity of labour supplied is equal to the quantity of labour demanded