ipl-logo

Factors That Influence The Elasticity Of Demand

1737 Words7 Pages
bulb-icon

Recommended: What factors affect price elasticity of demand

3. FACTORS THAT INFLUENCE THE ELASTICITY OF DEMAND FOR LABOUR
For one to understand, we use the terms elastic and inelastic. According to Mohr, Fourie, and associates (2008:160-162), Inelastic demand refers to when the quantity demanded changes according to a change in price. The percentage change in the quantity is less than the percentage change in the price for the product. Therefore, the price elasticity of demand, or the elasticity coefficient, is greater than zero, but smaller than one. For Elastic demand, it will be the opposite. Demand is elastic when a price change leads to a greater change in the quantity demanded.
Kaufman and Hotchkiss (2006:232) state that in labour economics, the elasticity of labour demand is one of the most …show more content…

(1998:360), the more rapidly the marginal product diminishes, the less elastic is the demand for labour, other things remaining the same. In some instances marginal product diminishes quickly, for example, the marginal product of one bus driver is high as he is highly valued to drive the bus but the marginal value of a second bus driver on the same bus is close to zero as a second bus driver on that bus is not needed. In other instances marginal product diminishes slowly, hiring another window cleaner to a team almost doubles the amount of glass that can be cleaned in an hour, the marginal product of the second window cleaner is almost as same as the first.
3.6 The Cross-Wage Elasticity of Demand
Ehrenberg and Smith (1985:95) indicate that as businesses may employ several categories of labour and capital, the demand for any one category can be affected by price changes in the others. For example, if the wages of carpenters rose, more people might build brick homes and that might cause an increase for those businesses. On the other hand, an increase in carpenter’s wages might decrease the overall building of homes in the economy. This would cause a decrease for the demand of plumbers. Changes in the price for capital could increase or decrease the demand for workers.
4. WAGE DETERMINATION IN BOTH PERFECT AND IMPERFECT

Show More
Related
2129 Words | 9 Pages

1) Isaac Hourwich’s purpose in writing this book is to oppose the claims of the Immigration Commission as there are also many stereotypes of Immigrants created by Native born Americans and also challenge the findings of the Immigration Commission. Hourwich uses his economic aspects to explain that Immigrants do not cause the labor market to decline, decreases wages, and increase unemployment in the United States. Most of the native-born Americans fear that as the rate of Immigration increases, it might hurt the American wage-earners. Therefore, there is an assumption that most American workers made was that “undesirable” Immigrants should be out of the country and keep the American workers busy. (82)

Read More
472 Words | 2 Pages

An increase in government purchases Shifts the AD curves to the right causing an increase in real income and the price level in the short-run. b. A reduction in nominal wages Shifts the SAS curve downward, causing an increase in real income and a lower price level. c. A major improvement in technology

Read More
800 Words | 4 Pages

Furthermore, the diagram illustrates how the public is finding occupations to fill. This decline in unemployment is quite effective mainly due to the fact that more citizens will have money to spend contributing to the airing of the economy. Now that individuals are working, they are becoming consumers in which supply and demand will soon become into effect. This would lead to more jobs being created in order to support the demand for

Read More
500 Words | 2 Pages

In this situation there is not enough physicians in relation to the amount needed at the set price due to the executive order. The amount needed can be referred to as demand which is a “combination of desire, ability, and willingness to buy a product” (Clayton, text). In this situation the demand is physicians in the U.S.. The need for doctors is inelastic. This occurs when “the percentage change in the independent variable causes a less than proportionate change in the dependant variable” (Clayton, text).

Read More
317 Words | 2 Pages

Unit 3 Discussion Assignment Elastic vs Inelastic Household good Inelastic One example of an elastic good is the price of natural gas. Firstly, let’s look at the supply of natural gas. If we look at the energy market, with a growing trend moving away from coal and other high pollutants we can see there are few substitutes. As coal moved out of favor and towards natural gas there are substitutes that would influence the demand of gas overall.

Read More
1130 Words | 5 Pages

Just like any other organization, chick-fil-A is greatly affected by the external environment of the business. Often, the external environment is made up of all outside factors and influences that affect the way an organization conducts its daily operation. It is worth noting that an organization has no influence over its external factors and thus, it has to re-engineer and redefine its process, products and services to work under the influence of the external environment. Below are some of the external factors that affect Chick-fil-A. Consumer income Consumer income is in the wider field of economic factors that affect the sales level of the enterprise. Consumers with high income are likely to possess the power and the ability to purchase products from the company in large quantities.

Read More
331 Words | 2 Pages

If businesses are earning more, they will need to hire more employees to keep up with the increased sales from the minimum wage consumers who have increased the spending because they have higher earnings. This in turn causes businesses to sell more products. If a business has a jumpstart to more sales, they may discover that they need more employees, producing more job opportunities. Causing employers to recruit more employees to supply the demand of labor, which will be needed due to the increased sales. Currently, the Government provides millions of house with some type of assistance.

Read More
305 Words | 2 Pages

Minimum Wage In this paper I wish to examine two different points of view on rising or not the minimum wage. Minimum wage, the lowest daily or monthly remuneration that employers may legally pay to workers. It was set for the first time in 1939 and varied with time. The most currently change has been made in July 2009 and people are willing changes to be done.

Read More
1536 Words | 7 Pages

Going along with the positive economic growth is the idea that if minimum wage is increased, and these workers turn around and spend this additional income, sales will increase to the point that businesses will need to employ extra workers. In other words, increasing the wages for minimum wage positions will create more minimum wage

Read More
1169 Words | 5 Pages

In the discussion of social inequality, one cannot leave out the sociological theories and models proposed by Karl Marx and Adam Smith. Generally, social inequality refers to the presence of unequal treatment, opportunities and rewards tied to people of various social standings within the hierarchy of a community group or society. Some common types of social inequality include wealth and income disparity as well as social class stratification. For Marx and Smith, both had explored the various types of social inequality in society.

Read More
720 Words | 3 Pages

One of the most important concepts that defined the capitalist economy is the division of labor. Throughout the years, great philosophers such as Adam Smith, Max Weber, and Karl Marx have discussed theories that have drastically changed and molded the modern labor force. Thus, the ideal of labor division was created. Its purpose is to distribute labor skills amongst groups of people and by doing so it enabled workers to build products quickly. From this ideal, it allowed industries to expand their productivity and create trade on a global scale.

Read More
1041 Words | 5 Pages

DEMAND CURVE Demand is defined as the different quantities people are willing to buy at different prices. As the price of good increases the demand decreases and vice versa. The law of demand states shows an inverse relationship between price and quantity demanded. The demand curve shows the relationship between the quantity of a good a consumer is willing to buy and the price of the good. The equation for that shows the relationship between the quantity demanded and price is as given below: QD =

Read More
1537 Words | 7 Pages

Adam Smith, David Ricardo or Karl Marx are known for many as the pioneers of contemporary economies. Their Work and researches were the bases of most of nowadays economic models used by countries around the world. Adam Smith, David Ricardo and their followers were labeled as the classical economists when later on Karl Marx and his followers were labeled as the Marxists. These two economic schools were some of the biggest in history, but yet differed in many ways. Through this paper, we would discuss the says of the Classical and Marxism schools concerning their views on wages, their different opinions about the theory of value, their sides about capital accumulation and finally the different point of view of the schools regarding the diminishing returns.

Read More
1564 Words | 7 Pages

On the other hand, inflation rates have a negative effect on the growth of the advertising industry. Inflation rates affect the prices of goods and services which also affects the purchasing power. If the purchasing power of the consumers decline, manufacturing industries will experience low returns. They will shift the burden to the advertising industry by reducing investment in the industry and therefore affecting growth. The other economic factors also affect growth in one way or another (FME, 2013).

Read More
1586 Words | 7 Pages

1. Introduction In the modest term, a minimum wage is a lawfully authorized minor bound for wages, but the term “lawfully authorised” is unclear, leading too many different kinds of minimum wages institutions (Cunningham et al, 2007:19). It further states that in the most straight forward cases, such as Brazil and Bolivia, the federal government identifies a wage level and all employers in the country must pay at that level or above it (2007:19). Economist have tended to oppose minimum wage on the grounds that they reduce employment , hurting many of those they are supposed to help (the economist:24/11/2012).

Read More

More about Factors That Influence The Elasticity Of Demand

Related Topics

Open Document