3.3 Workers

Question 1

Methods of compensation

Answer 1

Wages
Salary
Commissions
Bonus
Profit-related pay
Share/stock options
Fringe benefits

Question 2

What are Wages

Answer 2

Usually for unskilled/basic jobs that can be time based (time rate) or output based (piece rate) and is a variable cost for the firm.

Question 3

What is Salary

Answer 3

Paid to skilled workers. Paid monthly and is a fixed cost to the firm

Question 4

What is time rate

Answer 4

Method to calculate wages based on the number of hours worked

Quantity or quality of output doesn’t matter

Question 5

What is piece rate

in what way does it compare to time-rate

Answer 5

Method to calculate wages based on number of units produced or the output of the worker. Quality doesn’t matter

More productive than time rate.

Question 6

What is a bonus

Answer 6

Additional lump sum of money paid at the end of the year which depends on performance.

Question 7

What is profit related pay

Answer 7

Additional payment to all employees or select employees who have worked for the firm for a specific amount of time. Part of the profit is shared with them

Question 8

What are stock/share options

Answer 8

Workers may receive shares in the firm to give them an incentive to work hard.

Question 9

What are fringe beenfits

Answer 9

Are considered as a non-wage factor and are additional benefits which have a monetary value

Question 10

What is a job’s net advantages

Answer 10

All the wage and non-wage factors that affect the attractiveness of a job or occupation.

Question 11

What affects choice of occupation

Answer 11

Wage factors
Non wage factors
Career prospects
Level of training
Level of danger
Personal satisfaction
Recognition on the job
Level of experience required
Level of challenge

Question 12

Choice of occupation - Wage factors

Answer 12

Monetary related factors

Question 13

Choice of occupation - Non-wage factors

Answer 13

Non-monetary benefits

Question 14

Choice of occupation - Career prospects

Answer 14

Opportunities for growth and progression in an industry/company

Question 15

People who arent included in the supply of labour

Answer 15

Full time education
Voluntarily retired

Question 16

What is the backwards bending supply curve.

Answer 16

Wages will rise along with hours worked until a certain point, after which the number of hours worked reduces and wages continue increasing so that people can get more leisure time.

Question 17

what is the labour force participation rate

Answer 17

% of the working age population that is working rather than unemployed.

Question 18

How does the govt intervene in the labour market

NAME AND DEFINITION

Answer 18

Minimum wages - Lowest legal amount any firm can pay its workers which is set by the govt.

Question 19

Factors that affect the supply of labour

Answer 19

Demographic changes
Changes in net advantage
Changes in quality of edu/training
Changes in welfare benefits

NT DW

Question 20

What are demographic changes - supply of labour

Answer 20

Changes in size and age distribution of the population in an economy.

Question 21

Disadvantages of minimum wage

Answer 21

Unemployment
Surplus in labour
Cost of productions for firms will increase - will have to delay business decisions such as growth and expansion

Question 22

What are welfare benefits - s o l

Answer 22

If welfare benefits offered are reduced then people will be forced to work

If they are increased then people will get used to the benefits and won’t work.

Question 23

what are the changes in quality of edu/training- s o l

Answer 23

Changes in level and type of education and training courses offered can increase supply of workers with diff skills.

Question 24

Factors that dictate wage differences

Answer 24

Difference in abilities and qualifications and training
Type of job
Job satisfaction
Labour mobility
Non-monetary benefits

Question 25

Wage differences - diff in abilities and quals

Answer 25

Higher the amount of abilities, quals, training required lower the number of people who can have undergone it - higher the pay

Question 26

Wage differences - type of job and what are they paid

Answer 26

Dirty, dangerous, unsociable hours. Are paid more which is known as compensation differentials

Question 27

Wage differences - job satisfaction

Answer 27

Sometimes, satisfaction of the job can compensate for the lower wage rates. If the wage rate is low, but satisfaction is high it will still attract a lot of people,

Question 28

Wage differences - labour mobility with affects of high and low mobility

Answer 28

Ease at which workers can move between occupations and different areas in a country (or diff countries).

Workers may earn more since they can easily move to the job that pays them the most

High mobility - supply of labour is high - wage rates are low

Low mobility - supply of labour is low - higher wage rates

Question 29

Wage differences - non-monetary benefits

Answer 29

Firms may choose to give more fringe benefits than wages sometimes and vice versa.

Question 30

Adv of specialization

Answer 30

Will be considered as skilled labour and can earn more

Question 31

Disadv of specilization

Answer 31

Higher and longer levels of unemployment if the demand for their labour falls - lot of retraining will be required

This would lead to the govt giving more unemployment benefits - OC