demand for labour

Question 1

dead curve for labour and nature of labour

Answer 1

-shows how many workers will be hired at any given wage rate over a given period of time
-derived demand

Question 2

marginal revenue product of labour and eqn and curve

Answer 2

extra revenue generated when an additional worker is hired
-MRP=MPLxMR (marginal product of labour and marginal revenue)
-curve is like marginal product curve (wage y quantity of workers x), specialisation gains. MRP=MC of labour

Question 3

demand curve labour market, firm and industry, why and movements

Answer 3

-individal firm is the MRP
-industry: demand is downward sloping due to MRP.
short-run: law of diminishing returns
long run: substitutability of labour and capital, higher wage rates better to use cheaper capital
-extensions: fall in wages
-contraction: rise in wages

Question 4

MRP and criticisms

Answer 4

-MRP tells firm at a given wage rate how many workers to employ and for workers if MRP is wage, they will get a job

-how to measure productivity (teachers)
-teamwork makes it difficult to measure individual prod
-self-employed (don’t use idea of MRP)
-imperfect labour markets (trade unions)

Question 5

shifts of labour demand curve

Answer 5

-P: change in final price of product the labour is making
-D: demand of the final product
-P: change in productivity
-C: change in price of capital

Question 6

elasticity of labour demand, what and factors

Answer 6

-measures the responsiveness of labour demanded given change in wage rate
-S: substitutability of capital for labour (more more elastic)
-E: elasticicty of demand for product, pass on high wages to higher prices
-C: cost of labour as percentage of total cost
-T ime period