CHAPTER 57 DEMAND FOR LABOUR

Question 1

Elasticity of demand for labour

Answer 1

The responsiveness of the quantity demanded of labour to changes in the price of labour, the wage rate. It is measured by the formula
% change in quantity demanded for labour
% change in the wage rate

Question 2

Marginal physical product

Answer 2

The physical addition to output of an extra unit of a variable factor of production.

Question 3

Marginal revenue product

Answer 3

The value of the physical addition to output of an extra unit of a variable factor of production. In a perfectly competitive product market, where marginal revenue equals price, it is equal to marginal physical product times the price of the good produced.

Question 4

Total physical product

Answer 4

The total output of a given quantity of factors of production.

Question 5

Unit labour cost

Answer 5

Cost of employing labour per unit of output or production.