3.5.1 - demand for labour
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11 Terms
labour market - who supplies who demands
supply: workers
demand: firms
what kind of demand is demand for labour
derived demand - depends on the demand for goods/services
define marginal physical product
the physical addition to output of an extra unit of a variable factor of production
define marginal revenue product
the value of the physical addition of an extra unit of a variable factor of production (extra revenue generated when an additional worker is employed)
define total physical product
the total output of a given quantity of factors of production
define unit labour cost
the cost of employing labour per unit of output or production
4 factors influencing the demand for labour
price of g+s produced
demand for g+s produced
ability to substitute labour with machinery
productivity of labour (marginal revenue product!!)
price of g+s produced
high price = higher demand for labour:
high price = higher marginal revenue product of labour
high price = incentive to supply more (upwards sloping supply curve
demand for the final product
high demand = higher demand for labour
usually in an economic boom
ability to substitute
more cost-effective to switch = lower demand for labour
productivity of labour
high productivity = higher demand for labour
productivity often increases through training
Note 
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