6.1 The Demand for Labour - Marginal Productivity Theory

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5 Terms

1
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What is the demand for labour derived from

The demand for labour is derived from the demand for the goods and services that labour

2
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What is the marginal revenue product of labour

MRP is the additional revenue generated by employing one more unit of labour. It is calculated as MP x MR

3
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What does the demand curve for labour show?

The relationship between the quantity of a labour and wage rate. The downward sloping curve shows a inverse relationship

4
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What causes shifts in the demand curve for labour

Factors include:

  • The demand for the product

  • Labour Productivity

  • The Price of Capital

  • Government Regulations

  • Wage Rates

  • Elasticity of the labour

5
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What determines the elasticity of demand for labour

Determinants include:

  • The elasticity of the demand for the product

  • The proportion of labour costs in total costs

  • The ease of substituting labour with capital

  • Years of training required