The factors of production required to create consumer goods are scarce, yet humans have unlimited wants. Therefore, in order to satisfy more ends, more consumer goods need to be produced, which in turn requires an increase in the supply of the factors of production. In this regard, labor and leisure are two vital factors that play a key role in the production process. This chapter delves into the relationship between labor and leisure in the context of production, examining their impact on the economy.
There are limitations to the extent that labor expenditure can be increased. The quantity of available humans is one such limitation. Additionally, the quality and skills of each individual also influence labor expenditure. Finally, the willingness to work is a key aspect in determining the extent to which labor can be increased. This willingness is dependent on choice and opportunity cost, where the opportunity cost to labor is leisure.
Leisure is a consumer good that directly satisfies ends, while labor is targeted towards the attainment of a final product. Increased labor decreases the supply of leisure, which increases the marginal utility of leisure and decreases the marginal utility of the consumer's good. Conversely, an increase in leisure decreases the marginal utility of leisure, but it decreases the supply of labor, which increases its marginal utility. Hence, man will labor only when the marginal utility of labor outweighs the marginal disutility of leisure forgone.
The disutility of labor can increase above the leisure forgone, especially if the labor has undesirable aspects. For instance, working in a coal mine is for many people more painful than cleaning the dishes. The dissatisfaction of the specific work itself, as well as the utility of the contribution towards the production of the desired goods, are factors that determine what individuals labor on.
Labor and leisure are essential factors in the production process. The willingness to work is a significant factor in determining the extent to which labor can be increased. Leisure is a consumer good with diminishing marginal utility, while labor is targeted towards the attainment of a final product. The disutility of labor can increase above the leisure forgone, making it essential to find a balance between the two. In determining what to labor on, the disutility of leisure forgone, dissatisfaction of the specific work itself, and the utility of the contribution towards the production of the desired goods are critical factors to consider.
[[Consumption goods]] [[Production goods]] [[Means]] [[Law of marginal utility]] [[Subjective preference scale]]