Transcript Demand for Resources •Labor is one of the most important resources for production. •The demand for labor is dependent on the demand for final.

Demand for Resources
•Labor is one of the most important resources for
production.
•The demand for labor is dependent on the
demand for final finished products, so that
demand for labor is called “Derived Demand”
10-1
In general, demand for a resource depends on
• 1. Demand for product
• 2. Productivity of resource
• 3. Cost of resource
10-2
Labor Demand
• Marginal revenue product (MRP) of
labor is the change in a firm’s total
revenue when it employs one more
unit of labor
MRP = Change in total revenue
Unit change in labor
LO1
10-3
Labor Demand
• Marginal resource cost (MRC) is the
change in a firm’s total cost when it
employs one more unit of labor
MRC = Change in total (labor) cost
Unit change in labor
LO1
10-4
Labor Demand
• Rule for employing labor
•
LO1
MRP = MRC
Hire additional units of labor up to the
point at which labor’s MRP is equal
to its MRC
10-5
Occupational Employment Trends
• Rising employment
• Services
• Health care
• Computers
• Declining employment
• Labor-saving technological change
• Textiles
LO2
10-6
Employment Trends
10 Fastest-Growing U.S. Occupations in Percentage Terms, 2008–2018
Occupation
Employment, Thousands of Jobs Percentage
2008
2018
Increase*
Biomedical engineers
16
28
72.0
Network systems and data
communications analysts
292
448
53.4
Home health aides
922
1,383
50.0
Personal and home care aides
817
1,193
46.0
Financial examiners
27
38
41.2
Medical scientists, except
epidemiologists
109
154
40.4
Physicians assistants
75
104
39.0
Skin care specialists
39
54
37.9
Biochemists and biophysicists
23
32
37.4
Athletic trainers
16
22
37.0
Source: Bureau of Labor Statistics, www.bls.gov
LO2
10-7
Employment Trends
10 Most Rapidly Declining U.S. Occupations in Percentage Terms, 2008–2018
Occupation
LO2
Employment, Thousands of Jobs Percentage
2008
2018
Increase
Textile machine workers
35
21
-40.7
Sewing machine operators
212
141
-33.7
Postal service workers
180
125
-30.3
Lathe operators
56
41
-26.7
Order clerks
246
182
-26.1
Photographic processing
machine operators
51
39
-24.3
File clerks
212
163
-23.4
Machine feeders and
offbearers
141
110
-22.2
Paper goods machine setters
operators, tenders
103
81
-21.5
Computer operators
110
90
-18.6
10-8
Elasticity of Labor Demand
Ew =
Percentage change in labor quantity demanded
Percentage change in wage rate
• Ease of resource substitutability
• Elasticity of product demand
• Ratio of labor cost to total cost
LO2
10-9