CAS EC 101 Chapter Notes - Chapter 18: Production Function, Marginal Product, Demand Curve

• School: Boston University
• Department: Economics
• Course: CAS EC 101
• Professor: All

Document Summary

Identical to other markets, labor markets are government by the law of supply and demand. The output price of a good or service can alter the labor-demand curve; increasing output prices can result in raising the value of marginal product of labor and increasing labor demand. The case can be replicated vice- versa (decrease output, decrease value, decrease labor demand). The technological changes of a good or service can alter the labor- demand curve; advancements in technology raises the marginal product of labor, increasing the demand for labor. The changes in tastes or attitudes regarding certain types of labor can alter the labor-supply. The changes in alternative opportunities in other labor markets can alter the labor-supply of a specific market; the labor-supply can decrease when other occupations seem to be better alternatives to the current employment. An increase in labor-supply decreases the wage and raises employment. Conversely, a decrease in labor-supply increases the wage and reduces employment.