Derived demand, productivity, wage rates, wage elasticity of demand, capital
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An increase in derived demand would...
increase demand for labour in order to meet increased demand for the product
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An example of derived demand
Amazon saw a surge in online shopping demands during the lockdown causing the company to take on 22 thousand workers
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How does productivity affect demand for labour?
Productive workers produce a higher output per unit. They are demanded more by firms who are willing to pay a higher wage for them. Unproductive workers are not desired by firms
and so the demand for them in low.
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How do wage rates affect labour productivity?
An increase in WR is likely to cause excess supply of labour as workers are more incentivised to get a job due to a high income.
However, firms are unwilling to pay/cannot pay for higher price of workers, thus may need to make some redundant.
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What is wage elasticity of demand?
WED is responsiveness of a firm's demand due to a change in wage rates
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How does WED vary in the SR and LR?
Inelastic in SR
Elastic in LR
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Factors affecting WED
Degree of change in cost
Substitution
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Other cards in this set
Card 2
Front
An increase in derived demand would...
Back
increase demand for labour in order to meet increased demand for the product
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