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Edexcel A Level Economics A:復(fù)習(xí)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

Factors That Influence The Demand for Labour

  • 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

 

 

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