3.5 Labour markets

Question 1

Derived Demand

Answer 1

Demand for a factor of production, like labour, is dependent on demand for the good or service which the Labour provides.

Question 2

Marginal Revenue Product theory

Answer 2

Labour market theory of demand. Workers get paid what they are ‘worth’ to their firms. Wages equal your marginal revenue earned for the firm.

Question 3

Labour Supply

Answer 3

The number of people willing/able to work in a particular labour market at a certain price.

Question 4

Labour market

Answer 4

Wages are set by the interaction of S& D in the labour market. In other words where the MRP = the number of workers willing to accept the job at this wage (labour supply).

Question 5

Geographical immobility of labour

Answer 5

Geographical immobility refers to barriers people moving from one area to another to find work.

Question 6

Occupational immobility of labour

Answer 6

Occurs when there are barriers to the mobility of labour between different sectors of the economy leading to unemployment. Most obvious barrier is skills/training/education.

Question 7

National minimum wage

Answer 7

The National Minimum Wage is the minimum pay per hour almost all workers are entitled to

Question 8

Trade Unions

Answer 8

Organisation that represents workers in a firm or industry. Negotiates wages.