Labour demand curve

• What does the labor demand curve represent for an individual firm?

  The MRP curve
• Why is the labor demand curve for an individual firm shaped the way it is?

  Because of the law of diminishing marginal returns
• What relationship does the law of diminishing marginal returns show?

  An inverse relationship between wage and workers
• What is represented on the axes of the market labor demand curve?

  Wages (y-axis) and quantity of workers (x-axis)
• Why is the market labor demand curve downward sloping?

  It represents the total MRP of all workers
• What is the market labor demand curve representing?

  The total MRP of all lawyers in the industry
• Why is a simple, linear downward sloping demand curve used in textbooks?

  To avoid confusion and keep things simple
• What relationship do both the individual firm and market labor demand curves show?

  An inverse relationship between wage and workers
• What explains the downward sloping nature of the labor demand curves in the short run?

  The law of diminishing returns
• In the long run, what is variable for a firm?

  All factors of production
• What can firms employ in the long run as a substitute for labor?

  Capital
• In the long run, why might firms decrease the quantity of workers at higher wage rates?

  Capital becomes more cost-effective than labor
• In the long run, why might firms employ more workers at lower wage rates?

  Workers become more competitive than capital
• What is the inverse relationship in the long run due to?

  The substitutability between labor and capital
• What is crucial to understand about the market labor demand diagram?

  How to draw it and get the curves right
• Assuming firms lack wage-setting power, what does this diagram explain?

  Where wages come from
• How is the inverse relationship between wages and quantity of workers demonstrated?

  By observing movement along the labor demand curve
• What is it called when wages go up and there is a fall in the quantity of workers?

  A contraction of labor demand
• What is it called when wages go down and there is an increase in the quantity of workers?

  An extension of labor demand
• What assumption is made when analyzing movement along the labor demand curve?

  Ceteris paribus
• What does 'ceteris paribus' mean in this context?

  All other factors remain constant
• Why do firms require workers to have a high MRP at higher wages?

  To justify employing workers at that wage
• Why does a lower wage rate allow firms to employ workers with lower MRPs?

  The lower MRP is easier to justify
• What is the video encompassing?

  Labor demand for a firm and the market
• What concept is aggregated when considering the market labor demand?

  Total MRPs for workers