1.2 Business Economics : Unit 22 - 24

Question 1

1. What is value added?

Answer 1

• products or service have an increased values because work has been done on them

Question 2

2. What is wage rate?

Answer 2

• the amount of money paid to workers for their services over a period of time.(that is price of labour)

Question 3

3. What is derived demand?

Answer 3

demand that arises because there is demand for another good.

Question 4

4. What are the 5 factors affecting demand of labour?

Answer 4

Availability of substitutes.
Demand for the product.
Productivity of labor
Other employment costs

Question 5

5. What are the 8 factors affecting the supply of labour?

Answer 5

-Population size.
- migration.
- age distribution of the population.
- retirement age.
- school leaving age.
- female participation.
- skills and qualification.
- labor mobility.

Question 6

6. What is labor mobility?

Answer 6

-ease with which workers can move geographically and occupationally between different jobs.

Question 7

7. What are the 3 importance of quantity and quality of labor?

Answer 7

• labor available meets the skills required to maintain quality standards.
• High quality work.
• Less training costs.

Question 8

8. What is the importance of education and training on the quality of human capital?

Answer 8

• Increase in productivity.
• reduction in costs.
• increase in the quality of labor.

Question 9

9. What is boom?

Answer 9

• time when the business activity increase rapidly, so that demand for goods increases, prices and wages go up, and unemployment fails.

Question 10

10, What is boom and bust?

Answer 10

when an economy regularly becomes more active and successful then suddenly fails.

Question 11

11. What are trade unions?

Answer 11

trade unions are organizations that exist to protect the interests of workers.

Question 12

12. What are the 4 main aims of trade unions ?

Answer 12

• Negotiate pay and working conditions with employers.
• Provide legal protection for members such as representation in court if an employee is fighting a case against an employer.
• Put pressure on the government to pass legislation that improves the rights of workers.
• provide financial benefits such as strike pay when away necessary.

Question 13

13. What are the laws imposed by the government on trade unions to limit their power? (4)

Answer 13

• required trade unions to have a secret ballot before a strike.
• allowed businesses to sue for compensation if trade unions did not obey the law
• banned second picketing.
• made close shops illegal.

Question 14

14. What are the 2 advantages of trade unions to workers?

Answer 14

-negotiate better pay.
-negotiate better working conditions,

Question 15

15. What are the 2 disadvantages of trade unions to workers?

Answer 15

• less autonomy,
• workplace tension,
• slower advancement.

Question 16

16. What is closed shops?

Answer 16

• company or factory where all the workers must belong to a particular trade union.

Question 17

17. What is second picketing?

Answer 17

• workers in one workplace or company strike in a group at a particular location in order to support the striking workers in a different workplace or company.

Question 18

18. What do you mean by anti-competitive practices?

Answer 18

(or restrictive trade practices) attempts by firms to prevent or restrict competition.

Question 19

19. What are 4 ways government regulate competition?

Answer 19

• Promoting competition.
  -Limit monopoly power.
• Protect consumer interests.
• Control mergers and takeovers.

Question 20

20. How do governments promote competition? (3)

Answer 20

• Encourage the growth of small firms.
• Lower barriers to entry.
• Introduce anti- competitive legislation.

Question 21

21. What are the fit for purpose?

Answer 21

• usable(by a consumer) for the purpose for which it was intended.

Question 22

22. What are subsidiaries?

Answer 22

• companies that are at least half-owned by another company.

Question 23

23. What is minimum wage?

Answer 23

minimum amount which most workers are legally entitled to be paid.

Question 24

24. What are the four reasons for minimum wage?

Answer 24

• benefit disadvantages workers.
• to avoid claim welfare
• Incomes rise, workers may pay more tax.
• motivate any workers.

Question 25

25. One way in which governments intervene in the labor market?

Answer 25

• legislation, by setting a minimum wage.

Question 26

26. What are the impact of an increase of minimum wages on employment?

Answer 26

• Might result in unemployment.

Question 27

27. Why do minimum wages cause job losses?

Answer 27

this is because businesses may be unable to pay every existing employee the minimum wage amount.

Question 28

28. How to avoid the loss of jobs due to minimum wage?(3)

Answer 28

• if labor productivity rises at the same time.
• if employers are able to pass on wage increases to customers in the form of price rises.
• if profit margins are reduced.(employers meet the cost of the wage increase)

Question 29

29. What is government intervention?

Answer 29

where the government becomes involved in a situation in order to help deal with a problem.

Question 30

30. What are the 3 needs for government intervention?

Answer 30

• promoting competition.
• protecting consumer interests.
• Limit monopoly power.

Question 31

31. What are the 3 ways of promoting competition?

Answer 31

• encourage the growth of small firms.
• lower barriers to entry.
• Introduce anti-competitive legislation.

Question 32

32. What are the 4 reasons of regulating competition by intervention of the government?

Answer 32

• promoting competition.
• Limit monopoly power.
• Protect consumer interests.
• control mergers and takeovers.

Question 33

33. What are the 4ways businesses may try to exploit their customers?

Answer 33

• increasing prices to higher levels than they would be in competitive market.
• price fixing,
• restricting consumer choice by market sharing.
• raising barriers to entry by spending huge amounts on advertising