3.5.1 Demand for labour

Cards (4)

  • What is the labour market composed of?
    • Sellers of labour (households)
    • Buyers of labour (firms)
    • Workers supply their labour & firms demand their labour.
  • What is the demand for labour?
    Derived demand.
    • It depends on the demand for goods/services.
    • If demand for goods/services increases then the demand for labour will increase.
  • What factors influence the demand for labour?
    • The price of the product being produced
    • The demand for the final product
    • The ability to substitute capital (machinery) for labour
    • The productivity of labour
  • What is marginal revenue product of labour?
    The extra revenue generated when an additional worker is employed.