565126
Description
Mind Map by usman ahmed, updated more than 1 year ago
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Created by usman ahmed
almost 11 years ago
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Chapter 7 - The labour
market: Supply & demand
- Demand for labour
- Derived demand - the
demand for labour is derived
from the demand for the
good/service produced
- Determinants of a firms demand for labour
- Price of labour
- price of capital
- productivity
- supplementary
labour costs - e.g
training, NI
contributions
- Price of labour
- Demand curve for labour
- Derived
from
Marginal
Revenue
Product
curve
- =MRP
curve
from
max
onwards
- MRP=MPP*P
- MRP=MPP*P
- Firm
doesnt
demand
before max
because
wage> MRP
- Shifts -
MRP
changes,
MPP or P
changes
- Elasticity of
demand
curve - Q
before you P
-
- Determinants
- Time period - short term
inelastic, long term elastic
- Availability of
substitutes. easier
to replace with
capital = more
elastic
- Elasticity
of
demand
for the
product
- Proportion of labour
costs to total costs,
higher the proportion the
higher the elasticity, as
costs will be hit harder
when recruiting
- Time period - short term
inelastic, long term elastic
- Determinants
- Derived
from
Marginal
Revenue
Product
curve
- Derived demand - the
demand for labour is derived
from the demand for the
good/service produced
- Supply of
labour
- Individual supply - Offer curve
- Income effect - leisure
becomes more
affordable, trade more
work for leisure
- Substitution
effect, trade
off leisure
for work
- I>S, I=S , I<S
- Income effect - leisure
becomes more
affordable, trade more
work for leisure
- To an occupation
- Determinants
- Monetary
- Wage/Salary
- Commission
- bonuses
- Wage/Salary
- Non-monetary
- working conditions
- convenience
- hours required
- job security
- job satisfation
- working conditions
- Monetary
- Determinants
- To a firm
- Determinants
- Availability of
training for labour
- Location of firm
- Level of
unemployment, low
unemployment =skills
shortage
- Opportunities
for overtime
work
- Availability of
training for labour
- Supply curve
- Same as
normal curve,
S=net
advantage
- Elasticity -
%changesupplied/%wagechange
- Determinants
- Skills/qualifications
needed in the job
- length of
training
period
- sense of
vocation(suitability
felt by a person),
higher this sense,
more inelastic
- time period - short
term inelastic, long
term inelastic
- Skills/qualifications
needed in the job
- Determinants
- Same as
normal curve,
S=net
advantage
- Determinants
- Individual supply - Offer curve
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