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The Labour Market Supply and Demand | Labour Economics | Demand

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http://www.bized.ac.uk The Labour Market The Supply and Demand for Labour Copyright 2006 – Biz/ed http://www.bized.ac.uk The Labour Market ã The labour market is an example of a factor market ã Supply of labour – those people seeking employment (employees) ã Demand for labour – from employers – A ‘Derived Demand’ – not wanted for its own sake but for what it can contribute to production – Demand for labour related to productivity of labour and the level of demand for the product – Elasticit
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  http://www.bized.ac.uk Copyright 2006 ±Biz/ed The Labour Market The Supply and Demandfor Labour  http://www.bized.ac.uk Copyright 2006 ±Biz/ed The Labour Market ‡The labour market is an example of a factormarket ‡ Supply of labour ±those people seekingemployment (employees)‡ Demand for labour ±from employers ±A µDerived Demand¶ ±not wanted for its own sakebut for what it can contribute to production±Demand for labour related to productivity of labourand the level of demand for the product±Elasticity of demand for labour related tothe elasticity of demand for the product  http://www.bized.ac.uk Copyright 2006 ±Biz/ed The Labour Market ‡At higher wagerates the demandfor labour will beless than at lowerwage rates‡Reason linked toMarginalProductivityTheory The demand for labour is highly dependent on theproductivity of the worker ±the more the workeradds to revenue, the higher the demand. Title: Last California steel mill perseveres. Copyright: GettyImages, available from Education Image Gallery  http://www.bized.ac.uk Copyright 2006 ±Biz/ed Marginal Revenue Productivity ‡ Productivity refers to the amountproduced per worker per period of time ‡MRP = the addition to total revenue (TR)received from the sale of an additional unitof output ±Worker instrumental in producing that output ‡ Marginal Physical Product (MPP) ±theaddition to total product as a result of theemployment of one additional unit of labour ‡ MRP = MPP x P ‡If a good sells for £1.00 and a workerproduces 300 per day, the MRP of that unitof labour is £300 per day
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