Labour markets - demand

The Marginal Productivity Product of Labour measures...

• The amount by which a firm’s total output falls in the long run when it employs one more worker.

• The amount by which a firm’s total output rises in the long run when it employs one more worker.

• The amount by which a firm’s total output rises in the short run when it employs one more worker.

• The amount by which a firm’s total output falls in the short run when it employs one more worker.

Which of these describes the shape of the marginal physical product of labour (MPPL) curve

• MPPL will start with an upward sloping curve, then become downward sloping.

• MPPL will start with a downward sloping curve, then become upward sloping.

• MPPL looks like a 'U'.

• MPPL looks like a 'PPF'.

Which economic concept does the MPPL curve demonstrate?

• Comparative advantage

• Law of diminishing marginal returns

• Specialisation

What is the equation for MRP (demand for labour)

• MRP = P X MR

• MRP = AR X MR

• MRP = MPPL X MR

• MRP = MPPL X AR

What two factors would change the MRP?

• Labour productivity

• Average revenue

• Marginal Revenue

• Cost of production

Technical progress can result in firms substituting capital for labour. This rise in unemployment is known as...

• Unskilled workers

• Automation

• Unhappy workers

• Creative destruction

A firm currently pays a wage rate of £10 an hour to 4,000 unskilled workers and that a Trade Union then demands a wage rise to £12 an hour.

If the employer’s wage elasticity of demand for unskilled workers is -10 how many workers can expect to lose their jobs if this Trade Union demand is met?

• 500

• 800

• 1000

• 700

Which of these would result in high inelasticity in terms of demand for labour?

• Labour costs are a high % of total costs

• The firm can easily substitute labour for capital inputs

• Inelastic PED for the good/service