6.1 demand for labour Flashcards
(13 cards)
how can changes in technology increase the demand for labour?
1)improvements in technology can make labour more productive
2)improvements in technology can lead to an increase in high MRP jobs such as engineering or computer science
why can technology lead to a decrease in demand for labour?
capital becomes more productive than labour because it can operate for 24 hours a day at no labour costs
what is the elasticity of demand for labour
the proportionate change in demand for labour following a change in the wage rate
what are the determinants of the elasticity of demand for labour?
1)the proportion of labour costs to total costs
2)elasticity of demand for the good (necessity?)
3)subsititutibility with capital
4)demand for labour is inelastic in the short run
what is technical unemployment?
the loss of jobs due to technological change
what is the marginal revenue product?
the monetary value od the addition to a firms total output brought about by employing one more worker
what does the diagram for an individual firms demand for labour show?
law of diminishing marginal returns
what does the demand curve for labour show?
the relationship between wage rate and the number of workers employed
what are the causes of an increase in demand for labour?
1)increase in demand for the good
2)decrease in demand for a substitute goof
3)increase in productivity
4)a fall in the costs of labour eg national insurance contributions
5)an increase in the price of capital
what are some criticisms of MRP theory?
its difficult to measure productivity
1) in a team
2)for the self employed
why is the labour demand curve for the whole industry downward sloping?
due to the substitutibility of labour and capital- at higher wages, firms may choose to invest in capital instead
When will firms stop employing workers
It follows that once the marginal cost of the last worker employed is equal to their MRP, no more will be employed.
