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Economics ­ The Labour Market: Demand & Supply (8.11.12)

Demand for Labour
Derived Demand:
The demand for labour (factor of production) arises from the
demand for the output that it produces
The number of workers that a firm employs depends mainly on the
demand for the output produced
A rise…

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Marginal Productivity Theory
Demand for workers depends on their Marginal Revenue Product (MRP)
The MC of taking on an additional unit of labour = MRP
MRP = Change in total output arising from hiring one more worker
The equilibrium quantity of labour employed will be established
Short Run:
Firm takes…

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Shifts in Demand Curve for Labour:
Shift to the right:
· If MRP of Labour Increases (will come about if the MP of labour and/or
the MR increases)
· The demand for car assembly workers will increase is the productivity of
car assembly workers rise ­ could be as a…

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Factors that Determine Elasticity of Demand for Labour:
Time:
In the long-run it is easier to substitute labour for other factors of
production or vice versa
In the short-run firms may not have enough time to reorganise their
operations ­ will have the employ the same number of workers even…

Comments

davidsalter

Report

Comprehensive notes on the factors affecting the demand for and supply of labour including marginal productivity theory. About 8 pages in length.

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Pages in this set

Page 1

Preview of page 1

Page 2

Preview of page 2
Economics ­ The Labour Market: Demand & Supply (8.11.12)

Demand for Labour
Derived Demand:
The demand for labour (factor of production) arises from the
demand for the output that it produces
The number of workers that a firm employs depends mainly on the
demand for the output produced
A rise…

Page 3

Preview of page 3

Page 4

Preview of page 4
Marginal Productivity Theory
Demand for workers depends on their Marginal Revenue Product (MRP)
The MC of taking on an additional unit of labour = MRP
MRP = Change in total output arising from hiring one more worker
The equilibrium quantity of labour employed will be established
Short Run:
Firm takes…

Page 5

Preview of page 5

Page 6

Preview of page 6
Shifts in Demand Curve for Labour:
Shift to the right:
· If MRP of Labour Increases (will come about if the MP of labour and/or
the MR increases)
· The demand for car assembly workers will increase is the productivity of
car assembly workers rise ­ could be as a…

Page 7

Preview of page 7

Page 8

Preview of page 8
Factors that Determine Elasticity of Demand for Labour:
Time:
In the long-run it is easier to substitute labour for other factors of
production or vice versa
In the short-run firms may not have enough time to reorganise their
operations ­ will have the employ the same number of workers even…

Comments

davidsalter

Report

Comprehensive notes on the factors affecting the demand for and supply of labour including marginal productivity theory. About 8 pages in length.