Labour Market

Question 1

What is meant by the demand for labour?

Answer 1

The number of workers that employers are willing and able to hire at a given wage rate.

Question 2

What are the factors that influence the demand for labour?

Answer 2

• The price of the product (high PL = high MR = more labour wanted)
• Demand for the final product
• The ability to substitute for capital machinery (capital machinery is more productive)
• Productivity of labour (high productivity lowers average costs and more labour needed)