Labour Market

Demand refers to:

• Quantity consumers willing and able to buy at different prices

• Just willingness

• Total market supply

• Producers' schedule

What’s the law of demand?

• Higher price → less quantity demanded

• Higher price → more quantity demanded

• Lower price → less quantity demanded

• Price unaffected by demand

Supply is:

• The ability and willingness to sell at different prices

• Total demand by consumers

• Always downward-sloping

• Independent of producers' costs

Law of supply states:

• As price rises, quantity supplied falls

• As price rises, quantity supplied rises

• Price and supply are unrelated

• Only applies to labor markets

What causes a movement along the demand curve?

• Change in income

• Change in price of the good

• Change in tastes

• Change in price of related goods

A shift in demand curve means:

• Change in quantity demanded

• Change in demand at all prices

• Movement due to own price change

• Change in supply factors

Which would shift the demand curve rightward?

• Fall in income (normal good)

• Rise in price of substitute

• Introduction of price ceiling

• Improvement in production tech

What shifts supply curve right?

• Higher input costs

• Improvement in technology

• More firms exit the market

• Increase in taxes

Market equilibrium occurs when:

• Supply > Demand

• Demand > Supply

• Supply = Demand

• Government sets price

If price is above equilibrium, what happens?

• Shortage

• Surplus

• No change

• Demand rises