Edexcel A Level Economics A:復習筆記3.5.1 Demand for Labour

Category: A-level課程, 教材筆記, 福利干貨 Date: 2022年9月28日上午10:41

The?labour market?is composed of?sellers of labour?(households) &?buyers of labour?(firms)
- Workers supply?their labour &?firms demand?labour
The demand for labour is a?derived demand
- This means that?it depends on the demand for goods/services
  - If demand for goods/services increases then the demand for labour will increase - and vice versa

Factors That Influence The Demand for Labour

The price of the product being produced	The demand for the final product
If the?selling price?of the product?increases, it increases the?marginal revenue product of labour?& the firm will demand more labour Higher priced products incentivise firms to supply more (law of supply) & demand for labour will continually increase with increasing prices	As demand for labour is a?derived demand, when an economy is booming then?demand for most goods/services will be high?- and the demand for labour will be?high Conversely, when an economy is in a?recession?demand for most goods/services will be lower - and the?demand for labour will be lower
The ability to substitute capital (machinery) for labour	The productivity of labour
Firms will constantly evaluate if it will be possible &?more cost effective?to switch production from using labour to capital (machinery) If it is more cost effective, then?demand for labour will fall	If the?productivity?of labour increases (possibly through training) this will lower average costs & firms will likely demand more labour