Chapter 22/23/24 Flashcards
Define wage rates.
Amount paid for worker’s services.
What kind of relationship do wage rates and quantity demanded have?
Inversely proportional
What are the factors affecting demand of labor?
Derived demand, availability + productivity of substitutes for labor, other production costs
What are the factors affecting supply of labor?
Population size, migration, age distribution, retirement age, school leaving age, female participation, skills, labor mobility (geo/occupationally)
Where is equilibrium wage found on a graph?
Where demand and supply for labor are equal.
What is labor mobility?
How easily workers can move their jobs and move geographically
Why are quality and quantity of labor important to businesses?
Although costs of labor are important, a firm needs to decide whether the labor available meet efficiency levels needed. If not, they have to invest into education.
What impact does education and training have on labor?
Employers want to hire efficient workers, they’ll be more productive and know how to use advanced tech + any new laws
What is derived demand?
When demand for a good is affected by demand for another good e.g. labor
If demand for a product goes up, demand for labor of that product…
also goes up
If retirement age increases, supply of labour…
increases
What is a trade union?
An organization that works to protect the rights of workers in an industry
Outline the history of trade unions.
First, solved disputes between employees + employer. Then, became too powerful so authority was limited by using laws.
Name the laws passed by the gov which limits the authority of trade unions.
- Must have a secret ballot (vote on paper) before a strike
-Banned close shops (All employees of a firm belong to 1 union) - Banned secondary picketing (workers protesting outside another firm to stop them from dealing)
What affects can trade unions have?
- Can raise wage rates
- However, this may mean workers become resistant. This can be avoided if productivity rises with higher pay, price of goods rises, if profits reduced.
What is the need for government intervention?
Otherwise.. worker may be underpaid, environments damaged, consumers exploited and small business pressurized.
Govs need to protect stakeholders whilst ensuring businesses are still investing.
How does the gov regulate competition?
Promote competition
Limit monopoly power
Protect consumer interest
Control mergers and takeovers
How do govs promote competition/reduce monopoly power?
- Less taxes + business funding programs for small business/start ups.
- Less barriers to entry (laws)
- Laws against anti-competitive behavior e,g price fixing
Why do consumer interests need to be protected?
Firms may join together for price fixing and agree on higher prices, whilst consumers want the best quality and lower price.
Which fair trade issues are protected with laws?
Price, quality, product safety, age limits, info about products, promotion
Why do mergers and takeovers need to be blocked?
Otherwise, consumer choice falls and prices rise
How do govs intervene in the labor market?
By setting a minimum wage (minimum amount workers need to be paid)
What are the reasons for minimum wage?
-Believed that some ethnicities, women, and minorities face inequality- this protects them.
-Closes the gap between the rich and poor.
-Gov burden falls because there is less need for for welfare.
-Firms want to reduce inefficient labor with efficient- productivity rises.
How might minimum wages cause job losses
?
Businesses may want to fire workers to reduce costs. This may cause unemployment to rise. But efficient labor may cause economic growth, where demand for labor rises.
