Demand for labour (OCR A-Level Economics): Flashcards

Demand arising from demand for goods/services labour produces

Output per unit of input (per worker or per hour worked)

Average cost of labour per unit of output

Responsiveness of quantity of labour demanded to wage rate changes

Not for its own sake, but for goods/services it produces

Inverse relationship

Can complement labour or substitute it

Increases labour demand

Decreases labour demand

Easier substitution makes demand more elastic

Short run: inelastic; Long run: more elastic

$\frac{\text{Total Output}}{\text{Workers or Hours Worked}}$

$\frac{\text{Total Labour Costs}}{\text{Total Output}}$

$MRP = MPL \times MR$

Hire labour where MRP equals wage rate