Tài liệu tham khảo kinh tế vĩ mô bằng tiếng anh | The Labor Market As the price of the product that labor produces changes the factor demand curve for labor shifts A rise in product price shifts the firm s MRP. or factor demand curve rightward A fall in product price shifts the firm s MRP or factor demand curve leftward. It is always the case that MRP MRxMPP. Fora perfectly competitive firm where p MR it follows that MRP p X MPP. If p changes MRP will change. For example if product price j rises MRP rises and the firms MRP curve factor demand curve shifts rightward. If product price falls MRP falls and the firm s MRP curve factor demand curve shifts leftward. If MPP rises reflected in a shift in the MPP curve MRP rises I and the firm s MRP curve Ị shifts rightward. ỈĨ MPP Shifts in the Firm s MRP or Factor Demand Curve Market Demand For Labor We would expect the market demand curve for labor to be the horizontal addition of the firms demand curves MRP curves for labor. However this The Elasticity of Demand for The elasticity of deiwncl9or labor is the percentage change in the quantity demanded of labor divided by the percentage change in the price of labor. The higher the elasticity of demand for the product the higher the elasticity of demand for the labor that produces the product. The lower the elasticity of demand for the product the lower the elasticity of demand for the labor that produces the product. Ratios Substitute Factors Ratio of Labor Costs to Total Costs The higher the labor cost-total cost ratio the higher the elasticity of demand for labor the greater the cutback in labor for any given wage increase the lower the labor cost-total cost ratio the lower the elasticity of demand for labor the less the cutback in labor for any given wage increase Number of Substitute Factors The more substitutes for labor the higher the elasticity of demand for labor the fewer substitutes for labor the lower the elasticity of demand for labor. The Supply of Labor As the wage rate rises the quantity of supplied of labor
