3.5

• What does the demand curve for labour show?


  The quantity of labour that employers wish to hire at each possible wage rate
• Why is the demand for labour considered derived demand?


  Because it is derived from the demand for the product that labour produces

  
• What happens to the demand for labour if there is no demand for the product?


  There is no demand for the labour
• How do wage rates influence the demand for labour?

  As wage rates increase, demand for labour contracts
• What is the relationship between the demand for a product and the demand for labour?


  An increase in demand for the product leads to an increase in demand for labour

  
• How do prices of other factors of production affect the demand for labour?


  If machinery becomes cheaper, demand for labour will fall
• What impact do lower wages in other countries have on demand for labour in the UK?


  Higher wages in the UK may lead to lower demand for labour as businesses hire abroad
• How does technology influence the demand for labour?


  Improvements in technology can reduce demand for labour in some sectors
• What is the predicted percentage of jobs that could be lost to technology by 2040?


  About 47%
• How does regulation affect the demand for labour?

  High regulation can discourage firms from hiring, reducing demand for labour
• What is price elasticity of demand (PED) for labour?


  The responsiveness of the quantity demanded of labour to the wage rate
• How is PED of labour related to the price elasticity of demand for the product it produces?


  PED of labour is directly correlated to the price elasticity of demand for the product

  
• What happens to demand for labour if wages are a large proportion of total production costs?


  An increase in wages will lead to a large fall in demand for labour, making it elastic

  
• Why do high-skilled jobs tend to be more inelastic in demand for labour?


  Because high-skilled jobs cannot be easily replaced by substitutes
• How does time affect the elasticity of demand for labour?


  In the long run, demand for labour is more elastic
• What does the supply of labour curve show?


  The ability and willingness of people to make themselves available to work at different wage rates
• How does an increase in wages affect the supply of labour for an individual?


  It initially leads to an increase in hours worked, but may decrease beyond a certain point

  
• How can firms increase the number of hours worked by their workforce?


  By increasing hours of existing workers or recruiting new workers
• What role does population and age distribution play in the supply of labour?


  A high population and a favorable age distribution increase the supply of labour