Chapter 12.2, Problem 3R

To determine

To evaluate: the relation between the laws of supply and demand and unionization.

Explanation of Solution

Much as supply and demand rules influence the rates consumers pay for goods and services, so does the labor market. The labor market encompasses the interaction between workers and companies on the economy, rather than interacting specifically with consumer products. Organizations are the consumers in nature, and people provide the labor or supply. But all operate as wage-takers; companies have to take and pay the prices demanded by the market and employees have to accept those wages for the jobs done.

Many different factors will influence labor demand and labor supply, affecting wages, rates of employment and, thus, equilibrium. Changes in demand for labor from companies, Changes in labor supply may result from the population, such as growth that increases the size of the labor force or a shift in workers' age composition, such as more elderly workers or younger employees. Labor supply can also change because of employee preferences and labor market attitudes.

Economics Concept Introduction

Introduction: The labor market, relates to labor supply and demand, in which supply is generated by the workers and demand is given by the employers. It is a major component of every economy, and is closely correlated with money, commodities, and services markets.