Labor Demand and Supply

In: Business and Management

Submitted By t66204
Words 750
Pages 3
Running Header: Market Equilibration Process Paper

Labor Demand and Supply
Economics ECO/561
April 21, 2011

Running Header: Market Equilibration Process Paper
Introduction
The purpose of this paper is to relate the concepts of the market equilibrating process to a prior real-world experience occurring in a free market. The market equilibrating process will be explained and the following components will be considered in the explanation; Law of demand and the determinants of demand, law of supply and the determinants of supply, labor demand and supply.
Law of Demand and the Determinants of Demand
According to Economics: Principles, problems, and politics, a fundamental characteristic of demand is this: Other things equal, as price falls, the quantity demanded rises, and as price rises, the quantity demanded falls. In short, there is a negative or inverse relationship between price and quantity demanded. Economists call this inverse relationship the law of demand and the determinants are the “other things equal” in the relationship between price and quantity demanded (McConnell, Brue and Flynn, 2009).
Law of Supply and the Determinants of Supply
According to Economics: Principles, problems, and politics, the law of supply states that as price rises, the quantity supplied rises; as price falls, the quantity supplied falls and the basic determinants of supply are, resource prices, technology, taxes and subsidies, prices of other goods, producer expectations, and the number of sellers in the market (McConnell, Brue and Flynn, 2009).

Running Header: Market Equilibration Process Paper
Labor Demand and Supply
The demand and supply of labor are determined in the labor market. The participants in the labor market are workers and companies. Workers supply labor to company’s in exchange for wages as shown in a circular flow model. Companies demand labor from…...

Similar Documents

Historical Example of Labor Supply and Demand: the Great Depression

...Checkpoint: Historical Example of Labor Supply and Demand Aaron Rhome XECO/212 11/17/12 Jim Vernon Checkpoint: Historical Example of Labor Supply and Demand The era of American history known as the Great Depression represents the bleakest chapter in the history of the economy United States. A series of events culminated into the largest economic downturn in known history, with no end in sight. Following the stock market crash on September 3, 1929 millions of Americans rushed their banks to withdrawal their funds before their bank collapsed. Their actions caused many more banks to fail and limited the availability of credit to businesses. This lack of credit combined with reduced consumer spending lowered the demand for labor and unemployment skyrocketed as a result. At the outset of the depression domestic and foreign demand for automobiles had turned American auto manufacturing was the biggest industry in the world and was the driving force behind the U.S. economy (McCarthy, 2012). As thousands of banks and other companies closed or slowed production unemployment levels skyrocketed to a height of 25% by 1933 (Croft Communications, 2012). The increased supply of available labor coincided with a decrease in demand for automobiles resulting in a labor equilibrium that required fewer workers and lowered wages. According to McCarty (2012), “During the early 1930s, hundreds of thousands of workers...

Words: 395 - Pages: 2

Checkpoint: Historical Example of Labor Supply and Demand

...Checkpoint: Historical Example of Labor Supply and Demand Desiree Brownell XECO 212 2/15/2013 I chose to do my supply and demand response addressing the great depression. The great depression was a worldwide economic depression that started around 1929 and continued until about 1939. So far the great depression was and is the longest and most widespread depression that America has ever seen. During this particular point in history the demand for labor was higher than the demand for supply. America went through huge layoffs, employees were working for less, and companies where not hiring anymore. On October 29, 1929 the stock market crashed and there was billions of dollars lost by large businesses. The day the stock market crashed is still considered one of the defining factors and many hardships of the great depression. The impact on supply and demand of labor on one sector of the labor market- One of the biggest impacts of the supply and demand sector of the labor market was unemployment. 25 percent of all workers and 37 percent of all nonfarm workers were completely out of work. Employers were no longer hiring and could not afford to keep as many employees. Businesses where declining, therefore they were unable to pay as many employees wages and could not hire either. The factors that affected the labor demand and labor supply in the great depression where as I mentioned before unemployment, stock market crash, businesses no longer hiring, and employees were......

Words: 293 - Pages: 2

Supply and Demand

...Power Supply Boards: Supply and Demand William Chandler January 27, 2013 Eco/561 Watson T. Ragin Introduction The aftermarket of electronic repair parts offers easy entry into the market and produces a large demand from its customer base. Although there are many people who refurbish, the supply of certain replacement parts is overwhelmed by its demand, creating a deficit between the demand and quantity supplied. All successful businesses use supply and demand to determine what quantity to produce and what price to sell each unit at. Just about anything a business needs to know about profit, price, and quantity can be determined if it calculates its marginal costs and marginal revenues. Marginal cost and marginal revenue will also be used to determine what kind of profit can be expected at a given price. Increasing revenue, the mix between pricing and non-pricing strategies, minimizing costs, increasing barriers to entry, and maximizing profits, are all important decisions to make in order to produce a successful product. The Power Supply Board Parts such as the BP44-10200A and BP44-10200C are in high demand because factory manufacturers aren't producing enough replacement parts for malfunctioning TVs. Part of the reason for the unavailability of parts is the electronics manufacturer did not plan for all of the defective TVs. The lack of preparation for fixing defective TVs has provided an opportunity to enter the aftermarket and produce replacement power......

Words: 1094 - Pages: 5

Demand and Supply

...Aggregate Supply and Demand Model Kelly Guerrero, Kayla Levett ECO/372 June 18, 2013 Esperance Namugabo Aggregate Supply and Demand Model The Aggregate Supply and Demand model is driven by several factors, including non-price level factors or determinants can cause a change in the aggregate demand (“Colander, D. C.” 2010). Independent buying depends on the amount of money the individual maintains, what is expected from the money while spending, job security, and individual taxes. Investment spending and government spending are also a part of the model. The majority of Americans do not understand the true state of the economy. Currently, the United States consumes more than it produces monthly; meaning that the country is getting poorer every month. Individuals are not in tune with the events happening on a national level. During this expansion the expectations of the United States were not as hopeful as pervious expansions. Because of the current recession, the gross domestic product or GDP is not as high as past growth. The GDP beginning in 2008 was only 2.5% with a continual growth of 2% annually. This is lower than the previous expansion ending in 2007 that was 4%. This affects individual consumers, public sector spending, military spending, and government spending. (Reddy, 2013) During the Obama administration, recession recovery was slowly on the rise. Consumer spending rose 3.2% but cutback on saving money. Congress also passed a......

Words: 1205 - Pages: 5

Supply and Demand

...Supply and Demand Simulation ECO 365 Supply and Demand Simulation The Supply and Demand simulation was reviewed on the student website. The Supply and Demand Simulation consist of microeconomics and macroeconomics concepts. The concepts are explained and how they apply to the principle of microeconomics and macroeconomics. The simulations presents shifts in the supply and demand curve, the rationale for the shift is given. Each shift is analyze showing the effects of the equilibrium price, quantity, and decision making for the company presented. The concepts learned in the simulation will further allow me to understand how each can apply to my current workplace. An explanation of the price elasticity effects of demand effects the pricing strategy for consumers and company's is explained to gain an understanding of how important a strong strategy is relevant to success. In the simulation a neighborhood called Atlantis is used. Atlantis is a nice neighborhood with many amenities that consumers demand (University of Phoenix, 2012). A two bedroom apartment rental in Atlantis is used in the simulation to present the effects of supply and demand. The simulation presents several scenarios that have been acquired by the management company of the two bedroom apartment rentals. The scenarios will show how price can effect supply and demand while being competitive within the market. In the simulation microeconomics concepts are used. Microeconomics is the......

Words: 1321 - Pages: 6

Supply and Demand

...In many ways, supply and demand can make or break a business. If an individual business were to change their practices, goods offered, or even their seating arrangement, their bottom line could suffer dramatically. For example, one may examine the businesses of McDonald’s. What would happen if McDonald’s did away with one of their most popular business factors – the drive-thru. It could be easily assumed that their supply will go down due to the fact that many customers utilize the drive-thru and would no longer be able to do so. Therefore, they will not meet the expectations of as many people. With this change, their business operations would be affected in that the number of customers would decrease, thus decreasing the need for a larger workforce and drastically lowering the company’s income in that particular store. On the other side of the coin, say that the same store chose to increase the hours of operation of the drive-thru or expand the dining room area. This would increase the availability of the business’s offerings. An increase in customer accessibility will cause a rise in revenue, and potentially trigger a need for more staff. Changes like these would increase the business operations on a fiscal and labor scale. Now, one should look at what impact potential changes to the demand factors would have on the business. Say McDonald’s chose to do away with one of their most popular dishes – The Quarter Pounder. Almost everyone is familiar with this......

Words: 425 - Pages: 2

Supply & Demand

...2.1 Demand 2.1.1 Understanding the Determinants of Demand 2.1.2 Understanding the Basics of Demand 2.1.3 Analyzing Shifts in the Demand Curve 2.1.4 Changing Other Demand Variables 2.1.5 Deriving a Market Demand Curve 2.2 Supply 2.2.1 Understanding the Determinants of Supply 2.2.2 Deriving a Supply Curve 2.2.3 Understanding a Change in Supply versus a Change in Quantity Supplied 2.2.4 Analyzing Changes in Other Supply Variables 2.2.5 Deriving a Market Supply Curve from Individual Supply Curves 2.3 Equilibrium 2.3.1 Determining a Competitive Equilibrium 5.1 The Basic Assumptions of Competitive Markets 5.1.1 Understanding the Role of Price 5.1.2 Understanding Market Structures 6.1 Monopolies 6.1.1 Defining Monopoly Power 6.1.2 Defining Marginal Revenue for a Firm with Market Power 6.1.3 Determining the Monopolist's Profit-Maximizing Output and Price 6.3 Oligopoly 6.3.1 Introducing Oligopoly and the Prisoner's Dilemma 6.3.2 Understanding a Cartel as a Prisoner's Dilemma 6.4 Monopolistic Competition 6.4.1 Defining Monopolistic Competition 6.4.2 Understanding Pricing and Output under Monopolistic Competition Competency: 309.1.4 Economic Variables and the Economy 1.4 Production Possibilities 1.4.1 Understanding the Concept of Production Possibilities Frontiers 1.4.2 Understanding How a Change in Technology or Resources Affects......

Words: 516 - Pages: 3

Supply and Demand

...Production cost is by the producer and includes the cost of labor, capital, and materials that are being used. It is something that all producers have to think about when they are trying to sell a good or service. It is something they must take into account when trying to determine how much they will sell their product for. The price of a product is determined by a balance that is between production at each price and the desire with purchasing power. Coffee is on the rise because it is becoming more difficult for it to be produced due to economic issues. When supply and demand is being affected then production cost will also be affected (kind of like a domino effect). The cost to produce a good such as coffee will begin to increase. I agree with the author because the way the climate is will ultimately affect the production of coffee. With Brazil being one of the top producers and them experiencing a drought then it is expected for the price of coffee to increase. They are going to have to pay more to produce it so consumers will have to pay more to drink it. References Yang J. 2014.Coffee shortage may arise due to drought, climate change, rising demand analyst say WashingtonPost.http://www.washingtonpost.com/business/economy/2014/02/21/0f16ed44-9b28-11e3-975d-107dfef7b668_story.html Josephs L. 2013. Coffee Demand Shifts Down-Market. Wall Street Journal. (Internet Article).......

Words: 251 - Pages: 2

Supply and Demand

...division of labor and quotas that are given to them; therefore making it a big benefit to the organizations. Socialism also focuses on the situation at hand and therefore they have a better turn around in getting the job accomplished. The cost of the gas to heat our homes goes up during the winter time due to the simple law of supply and demand. When it comes to the law of supply and demand www. investopedia. com explains it as “the effect that the availability of a particular product and the desire (or demand) for that product has on price” (Investopedia, 2014). The higher the demand and the less availability of the wanted product, the higher the company is going to make the price. Even if there is a high supply, if the demand is also high, then the price still could be high as well. During the summertime, we don’t really use that much heat energy, therefore our bills are not very high and much more affordable. The company is able to do this because we as the consumers are not using near the amount of energy that we do whenever the temperatures drop. However, when it starts to turn cold, and we start to use more energy, then the company is able to raise the prices that we pay for the service. We as humans have to have the heat in order to survive through the treacherous winter temperatures. There’s really nothing that we can do about the company being able to “man-handle” us into their prices. Works Cited Investopedia. (2014). Retrieved 09 04, 2014, from Law of......

Words: 755 - Pages: 4

Supply and Demand

...Supply and Demand Simulation ECO 365 Supply and Demand Simulation The Supply and Demand simulation was reviewed on the student website. The Supply and Demand Simulation consist of microeconomics and macroeconomics concepts. The concepts are explained and how they apply to the principle of microeconomics and macroeconomics. The simulations presents shifts in the supply and demand curve, the rationale for the shift is given. Each shift is analyze showing the effects of the equilibrium price, quantity, and decision making for the company presented. The concepts learned in the simulation will further allow me to understand how each can apply to my current workplace. An explanation of the price elasticity effects of demand effects the pricing strategy for consumers and company's is explained to gain an understanding of how important a strong strategy is relevant to success. In the simulation a neighborhood called Atlantis is used. Atlantis is a nice neighborhood with many amenities that consumers demand (University of Phoenix, 2012). A two bedroom apartment rental in Atlantis is used in the simulation to present the effects of supply and demand. The simulation presents several scenarios that have been acquired by the management company of the two bedroom apartment rentals. The scenarios will show how price can effect supply and demand while being competitive within the market. In the simulation microeconomics concepts are used. Microeconomics is the study of behavior on a...

Words: 1321 - Pages: 6

Checkpoint Historical Example of Labor Supply and Demand

...John McGee Tracey Mariner September 9, 2011 CheckPoint: Historical Example of Labor Supply and Demand In this assignment, I was asked to chose a historic event and describe the event in terms of labor supply and demand. The historic event I chose was the Great Depression. This era spanned for 1929 thru 1939. Not only was the Great Depression happening there was also World War II. The great depression was a time in America where the demand for labor was higher than supply. The Law of Supply was the more the wages were for labor the more people would want to work. The Law of Demand was the higher the pay; employers would hire fewer employees. This was not the case during the great depression, the Law of Supply showed that the lower the wages went, the fewer the employees.   During the great depression the main problems were that, employers were not hiring because their business were not doing good and the decline in goods being bought and sold. During this time, goods were not being bought because there was such a high unemployment rate and people just did not have the money to buy the goods that these companies were developed. Towards the end of the war, America was heading for a change and businessmen started to rebuild/build plants. This created jobs for the unemployed and slowly began the process of moving forward. During this time there was a great demand for planes, tanks, and boats, which allow for even more employment opportunities. Once......

Words: 287 - Pages: 2

Supply and Demand

...In a labor market, the supply refers to the employees or the labor class and demand refers to the employer willing to hire these employees on a certain wage. In a labor market, equilibrium is reached when the employers are willing to hire all the number of employees on the wages these employees/labor are seeking and so the consensus is reached between the demand and the supply of labor. Labor market equilibrium behaves in a way similar to any demand supply equilibrium. The supply increases from many factors such as if the wages rise or the population increases. Similarly, the demand is affected by the factors such as unit cost per labor and economic situation and the workforce changes. The interesting fact here is that though the market always tends to achieve the state of equilibrium, but it never actually achieves it for long since the market conditions and workforce attitudes and society values are always changing. For example, women today are more a part of the labor workforce than they were a decade ago and it is still increasing. And such changes in the attitude and beliefs in society affect the supply and demand of labor too. Also, the fact to note here is that the demand of labor is created by the firm who manufacture goods or provide services and these are the firms that play a role to decide the per unit labor wages and have a role to play in achieving the labor market equilibrium. And to achieve this equilibrium, these firms make sure that the marginal cost to hire...

Words: 282 - Pages: 2

Historical Example of Labor Supply and Demand

...money. Demand for goods and services decreased because people had less money to spend. Because of this, the market equilibrium was decreased and there became an excess of goods and services. Usually when there is an excess of goods and services we would see prices drop because of competition, therefore the demand for goods and services would increase. This time however, there was such an increase in goods and services that people started losing their jobs because they were no longer needed to produce goods or provide services. This is not a conventional way of looking at the way the economy operates. During the depression, people did not have any money to spend because they didn’t have jobs to earn an income. During the worst, or lowest, point of the depression, approximately 25% of all workers were unemployed. Additionally, 37% of nonfarm workers did not have jobs. People did not have money to eat and also some could not keep their property because they could not afford it. It was a time of economic hardship and despair for numerous people throughout the entire country. During the great depression people tried to save money in every way that they possibly could. People were not interested in borrowing money from banks because of the fear they would not be able to pay it back even though banks had lowered their interests rates. The Great Depression affected nearly everyone and practically every aspect of the economy. Michelle, H. (2006). The laws of supply and demand,......

Words: 360 - Pages: 2

Supply and Demand of Labor

...Supply and Demand of Labor Shannon Sampson XECO/212 James Nzokah April 20, 2012 Throughout history there have been many different events that have affected the supply and demand of labor, but there are few that have had as great of an effect as the Black Death. Considered to be one of the worst disasters to hit per industrial Europe, the Black Death swept through Europe from 1347 -1353, and was responsible for shifting the demand for labor and the supply of it in a way few other events have done at any point in history, Prior to the onset of the Black Death in 1347 (Routt, 2010) the demand for labor was lower than the supply of it, Europe was crowded and there was plenty of people to choose from to get the work done, so the lords were able to pay lower wages due to the shear fact that there was always someone willing to work for less just to put food on their table. In 1353 when all was said and done the population of the European people had been diminished by a staggering amount. (Routt, 2010) This lose in so many human lives shifted the ready supply of labor. Even though the demand for labor was less due to this same loss of life, it was still higher than the ready supply of labor. This shift to demand being higher than the supply meant that a person could charge more for their labors. This accrued all a crossed the labor markets so it effected everyone. (Routt, 2010) Bibliography Routt, D. (2010, april 02). The Economic Impact of the......

Words: 290 - Pages: 2

Supply and Demand of Labor

... SUPPLY AND DEMAND OF LABOR XECO/212 04/20/2012 Jason Mackey Looking back into the U.S. history and certain things that happened throughout the economical history of this country we can see some extreme changes in the economic make up of the country. In the 1930’s the country suffered from a devastating economic failure called the great depression. What happened during this time is the stock market took a major hit and basically put the country into an economical tail spin. People all across the country lost millions of dollars which caused the demand for all kinds of products and services to drop significantly. At the same time this caused a extreme overstock of services and goods. What occurred next is many people became unemployed because their trade or product was not considered needed. This unfortunate time in history caused people to lose their jobs at an extreme level. This had a chain reaction on the economy that many did not see coming. When one job was lost, this had a cascading affect on the entire business world. At a point in time people thought they could travel out west to find jobs when this was not the case the catastrophe had an impact on the entire country. When people have no money to buy things and no way of supporting themselves bad things begin to happen. People begin losing their homes and starvation can set in and before you know it the entire country is devastated. During the great depression labor supply and demand played a major role on......

Words: 298 - Pages: 2