Labor Market Notes

The Labor Market

• Wages and employment are determined by supply and demand.

Supply and Demand at Work

• Labor Market:

• Buyers: Firms purchasing worker's time.

• Sellers: Workers supplying their time.

• Wage: Price of labor.

• Equilibrium: Intersection of labor supply and demand curves.

• Supply:

• Workers sell their labor.

• Higher wages = more hours willing to work (Law of Supply).

• Labor supply curve slopes upward.

• Demand:

• Businesses demand labor.

• Lower wages = cheaper to