6.2 Influences On The Supply Of Labour To Different Labour Markets

Question 1

What does the demand curve for labour show?

Answer 1

How much labour all the firms demand at different wages

Question 2

What does the labour supply curve show?

Answer 2

Shows how much labour all the workers plan to supply at different wage rates

Question 3

What are the two factors that influence the amount of labour workers are willing to supply?

Answer 3

1. Money wage rate
2. Utility derived from other aspects of working(non-monetary benefits) eg job satisfaction

Question 4

How is a person who enjoys their job influenced?

Answer 4

Net advantage of work> welfare yielded by the wage
(Willing to work for a lower wage than if there was no job satisfaction)

Question 5

What type of work creates job satisfaction?

Answer 5

Commonly heavy manual labour and factory work

Question 6

What is the substitute of work for workers?

Answer 6

Leisure time

Question 7

What are work and leisure both affected by?

Answer 7

Law of diminishing marginal utility

Question 8

What happens as more labour is supplied at an hourly rate?

Answer 8

Less and less satisfaction for the worker

Question 9

How much labour must a worker supply to maximise personal welfare

Answer 9

Utility of welfare from the last unit of money earned=utility of welfare from the last unit of leisure time sacrificed

Question 10

What does utility of welfare from the last unit of money earned=utility of welfare from the last unit of leisure time sacrificed essentially mean?

Answer 10

Marginal private benefit received from supplying labour=marginal private cost incurred from giving up leisure time

(No incentive for worker to supply labour at current rate)

Question 11

What does a higher wage do to a worker?

Answer 11

Gives more incentive give to work more hours

Question 12

What should a worker do if higher wages are offered

Answer 12

At the margin, should work more to maximise personal welfare

Question 13

Do non-monetary advantages usually change quickly or slowly?

Answer 13

Slowly

Question 14

What does changes in mon-monetary factors do?

Answer 14

Shift the individual and market labour support curve

Question 15

What are the non monetary factors?(5)

Answer 15

-job security
-promotion prospects
-good working conditions
-holidays entitlement
-other psychological benefits of work

Question 16

If people value leisure time at a given wage rate what happens to the labour supply curve?

Answer 16

Labour supply curve shifts to the left

Question 17

If people value goods and services time at a given wage rate what happens to the labour supply curve?

Answer 17

Labour supply cover shifts to the right

Question 18

What 3 factors can shift the labour supply curve?

Answer 18

Changes in income

Changes in population

Changes in expectations

Question 19

How does changes in income shift the labour supply curve?

Answer 19

-rise in income leads to increased demand of leisure (leisure is a normal good), increase in leaisre shifts supply curve to the LEFT

-if leisure time is an inferior good higher income reduces leisure time and shifts labour supply curve to the RIGHT

Question 20

How does changes in population shift the labour supply curve?

Answer 20

-rise in population - SHIFT TO THE RIGHT
-fall in population- SHIFT TO THE RIGHT

Question 21

How does changes in expectations shift the labour supply curve?

Answer 21

-people become more optimistic about time span-SHIFT TO RIGHT

-increase number of people in higher education-SHIFT TO THE LEFT

Question 22

What is the elasticity supply of labour?

Answer 22

How the supply of labour proportionally changes with following a change in wage rate

Question 23

What is the calculation for the Elasticity supply of labour?

Answer 23

Change in quantity of labour supplied/change in wage rate

Question 24

What 4 factors affect the elasticity supply of labour?

Answer 24

-level or skill (unskilled elastic-short time period to train)(skilled inelastic-long period to train)

-factors which reduce the occupations and geographical mobility of labour-tend to reduce elasticity of labour

-more elastic in long run than short run(time period)

-availability of a pool of unemployed labour increases the elasticity supply of labour(full employment has the opposite effect)

Question 25

Diagram for market supply of labour

Answer 25