Question

Why are the factors that shift the demand for a product different from the factors that shift the demand for labor? Why are the factors that shift the supply of a product different from those that shift the supply of labor?

Short answer

Price transmits the information from goods market to affect the labor market.

Step-by-step solution

Step 1. Definition

The demand curve of both product and labor is downward, whereas the supply curve of both product and labor is upward. The demand and supply curve will shift up or down due to many forces active in the economy.

Step 2. Explanation

Demand for a product is dependent on the price of the product, price of subsidies, task and preference. Demand for labor is dependent on the wage rate in the market. A shift in the demand for a product is caused by factors related to the demand for product,

A shift in the demand for labor is associated with the cost of production, supply of inputs and demand for the product being produced.

Step 3. Conclusion

Factors that affect the supply of labor are related to incentive to work. The factors that affect the supply of a product are related to the inputs used in production.