04 Markets in Action Flashcards
Define labour.
A component of the factors of production - the labour force comprises of those of working age who are either in work or are actively seeking work.
Define market.
A situation where buyers and sellers come together to engage in trade.
Define demand for labour.
The demand for labour shows how many workers an employer is willing and able to hire in a given time period.
Who demands labour?
Firms.
Who supplies labour?
Households.
Why is demand for labour downward slopping?
As employment rises, the amount of wages increases.
What factors cause a movement along the demand for labour curve?
- Higher wages in a ‘boom’ - in a boom, there’s more demand for workers
- Changes in the NLW (regulation) - all wages change, the NLW changes
- Trade Union power - collective barganing - to demand improved working conditions and higher wages
What factors shift the demand for labour curve?
- Lower demand for the final product
- A decrease in productivity - means a fall in demand as there is less supply
- Development of new technology (a substitute to human labour) - increase in demand becaue lots of the product is being produced
What factors cause a movement along the supply of labour curve?
- Changes in wages
- Changes in the national living wage
What factors shift the supply of labour curve?
- Net migration - causes a change inthe population - increase in new migration = increase in supply of labour
- The quantity of working population - decrease in the quantity is a decrease in supply of labour
- Level of income tax - fall in income tax = increase in incentive to work
- Level of benefits - increase benefits = fall in incentive to work
What are the pros and cons of a National Minimum Wage to the economy?
Pros:
- The general standard of living would improve
- Provides incentive to work
- Increases income of low-paid workers
- Improves labour productivity - workers more motivated
Cons:
- Could lead to unemployment due to excess supply of workers
- Firms may not be paying the minium wage due to a lack of regulation
- Could discourage continuing edcuation, if its high
- Could lead to higher prices as firms pass on wage increases
- Some firms can’t afford the wages
What are wage differentials?
The differences between wages in different occupations; demand and supply can explain why some occupations have higher wages than others. This could be illustrated by comapring two different demand and supply diagrams for two different occupations.
Define owner occupied housing.
Individuals purcahse property and live in it themselves.
Define rental property market.
Monthly paymenths to property owner (landlord)
What are the factors that affect the demand for housing?
- Population
- Income
- Social trends
- Interest rates
- Availability of Credit
- Price of subsittutes
- Expectations
