Reading: Elasticity of Labor: Supply & Demand
Elasticity
of labor demand measures the responsiveness of demand when there is a change in
the wage rate. It depends on:
•Labor
costs as a % of total costs: When labor expenses are a high % of
total costs, then labor demand is more elastic.
•Ease
and cost of factor substitution: Labor demand is more elastic when a
firm can substitute easily between labor and capital inputs.
•Price
elasticity of demand for the final output: This determines whether a firm can pass
on higher labor costs to consumers in the form of increased prices.
![](https://study.christianleaders.org/pluginfile.php/232570/mod_page/content/1/eol1.png)
Elasticity
of labor demand measures the responsiveness of demand when there is a change in
the wage rate. It depends on:
•Labor
costs as a % of total costs: When labor expenses are a high % of
total costs, then labor demand is more elastic.
•Ease
and cost of factor substitution: Labor demand is more elastic when a
firm can substitute easily between labor and capital inputs.
•Price
elasticity of demand for the final output: This determines whether a firm can pass
on higher labor costs to consumers in the form of increased prices.
![](https://study.christianleaders.org/pluginfile.php/232570/mod_page/content/1/eol2.png)
Elasticity
of labor demand measures the responsiveness of demand when there is a change in
the wage rate. It depends on:
•Labor
costs as a % of total costs: When labor expenses are a high % of
total costs, then labor demand is more elastic.
•Ease
and cost of factor substitution: Labor demand is more elastic when a
firm can substitute easily between labor and capital inputs.
•Price
elasticity of demand for the final output: This determines whether a firm can pass
on higher labor costs to consumers in the form of increased prices.
![](https://study.christianleaders.org/pluginfile.php/232570/mod_page/content/1/eol3.png)
Elasticity
of labor supply measures the extent to which labor supply responds to a change
in the wage rate in a given time period
![](https://study.christianleaders.org/pluginfile.php/232570/mod_page/content/1/eol4.png)
Elasticity
of labor supply measures the extent to which labor supply responds to a change
in the wage rate in a given time period
![](https://study.christianleaders.org/pluginfile.php/232570/mod_page/content/1/eol5.png)
Последнее изменение: вторник, 14 августа 2018, 10:14