| Term | Definition |
|---|
| In a free market, the wage paid to a worker depend upon | the demand for the workers's skill and the supply of people with the skill |
| highly paid workers | in greater demand and limited in supply |
| low paid workers | low demand and large supply |
| The demand for labour is | a derived demand, that is workers are demanded for the contribution they make to a company and the amount of revenue they will earn for the business |
| marginal revenue productivity | = number of output made by a worker * the price of the product when sold |
| Firm will employ workers up to the point where | the marginal revenue productivity of the last worker employed is just equal to the wage the firm has to pay |
| the firm's profit is shown by | the area above the wage rate, below the MRP curve minus the initial area of loss |
| Marginal revenue productivity curve | is the demand curve for labour, which shows the relationship between wages paid and workers employed |
| The movement of the MRP curve is caused by | an increase in the price of the product produced or workers being more productive and producing more output |
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