LYCEUM NORTHWESTERN UNIVERSITY

DAGUPAN CITY
TAPUAC,DISTRICT DAGUPAN
CITY
College of Teacher Education

NAME: Bernadette C. Gatchalian

COURSE & YEAR : BSED-SS 2A
INSTRUTOR: Dr. Thelma A. Royeca
SUBJECT: Comparative Economic Planning

INTRODUCTION
The demand for labor is usually understood by economists to mean the
demand for labor services by a firm, an industry, or the economy at a
given real wage. In a capitalist economy, labor becomes a commodity
that is bought and sold on the market just like any other commodity, such
as bread or butter. Labor is a unique commodity, however, and when an
employer buys labor, he or she obtains a worker’s “labor power” which is
the amount of services that the employer gets from the worker. These
services depend on the power the employer has over the worker. If there
is high unemployment, for example, the worker is in a weak position and
greater labor services can be extracted from him or her. The amount of
labor services that the employer obtains (not only in terms of hours of
work, but in terms of the efficiency of those services) also depends on the
nature of the employment contract, the real wage paid to the worker, the
conditions of employment, and the attitude of the employer to the worker
(and vice versa). Labor services consist of three components: the number
of workers (employees), the average hours worked per worker, and the
efficiency per hour of the worker. There are several institutional and legal
constraints on employers in most developed countries.
 LYCEUM NORTHWESTERN UNIVERSITY
DAGUPAN CITY
TAPUAC,DISTRICT DAGUPAN
CITY
College of Teacher Education

DISCUSSION PROPER
BREAKING DOWN Demand for Labor

Demand for labor is a concept that describes the amount of demand for
labor that an economy or firm is willing to employ at a given point in
time. This demand may not necessarily be in long-run equilibrium. It is
determined by the real wage firms are willing to pay for this labor and
the number of workers willing to supply labor at that wage.

Considerations in Demand for Labor

According to the law of diminishing marginal returns, by definition, in most

sectors, eventually the MPL will decrease. Based on this law: as units of
one input are added (with all other inputs held constant) a point will be
reached where the resulting additions to output will begin to decrease;
that is marginal product will decline.

Demand for labor is a concept that describes the amount of demand for
labor that an economy or firm is willing to employ at a given point in
time. This demand may not necessarily be in long-run equilibrium. It is
determined by the real wage firms are willing to pay for this labor and
the number of workers willing to supply labor at that wage.According to
the law of diminishing marginal returns, by definition, in most sectors,
eventually the MPL will decrease. Based on this law: as units of one
input are added (with all other inputs held constant) a point will be
reached where the resulting additions to output will begin to decrease;
that is marginal product will decline.This can be used to determine the
optimal number of workers to employ at a given market wage rate.
According to economic theory, profit-maximizing firms will hire
workers up to the point where the marginal revenue product is equal to
the wage rate because it is not efficient for a firm to pay its workers more
than it will earn in revenues from their labor.
 CONCLUSION
The law of demand is an important concept in economics. It explains the
relationship between the quantity of goods and services demanded and
other factors including price, preferences, income and number of buyers.
Business owners and companies should take time to understand the law
of demand and comprehend the various factors that may increase demand
for their products.This will help them to maximize their sales since they
will perfectly understand the market during specific periods. The
understanding of the law of demand is also useful in determining the
quantity of supply needed for a particular commodity. The demand for
labor refer to the relationship price has with the quantity consumers
demand and the quantity supplied by producers. As price increases,
quantity demanded decreases and quantity supplied increases.Perfect
competition represents an economy with many businesses competing
with one another for consumer interest and profits.Knowing this will lead
countries to specialize and trade products among each other rather than
each producing all the products it needs.

Workers are willing to supply labor because the wages they earn enable
them to buy the goods and services they want. When graphed, the supply
of labor looks much like the supply of other goods and services.