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Economics > Chapter 6 > Flashcards

Chapter 6 Flashcards

1
Q

What is the labour market

A

Essentially the price theory of goods of an economy operating in the labour market

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2
Q

Who is the supply and demand in labour markets

A

Supply: households
Demand: firms

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3
Q

Why is labour derived demand

A

Because a firm only demands labour for the profit the product of labour produces.
‘Wanted not for it’s own sake, but as a consequence for something else’

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4
Q

Define marginal labour productivity

A

The addition to a firms total output brought about by employing one more worker

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5
Q

Marginal physical product of labour is another word for …

A

Marginal returns (product) of labour

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6
Q

Draw the marginal physical product of labour

A

…

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7
Q

Define marginal revenue product of labour

A

Money value added to a firms total output brought about by employing one or more worker

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8
Q

How can the marginal physical product of labour be converted into the marginal revenue product of labour

A

Marginal physical produced X Marginal revenue = Marginal revenue product

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9
Q

In a perfectly competitive labour market what does MR equal to

A

AR and Price

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10
Q

What does the demand curve show in labour markets

A

The relationship between wage rate and number of workers employed

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11
Q

Explain how wage rate effects number of workers employed

A

Lower the wage the more employed

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12
Q

What shifts market demand curve for labour in labour markets (Why demand changes)

A

-Change in technology
Substitute labour for other factors
Increase the demand of certain expertise
-Change in productivity

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13
Q

When is labour inelastic

A
  • Wage only forms a small part of production cost
  • Demand for good or service being produced is inelastic
  • Difficult to substitute other factors
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14
Q

Draw the market supply of labour

A

…

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15
Q

What are the two factors a worker needs to consider to maximise net advantage

A
  • Supplying labour

- Enjoying leisure time

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16
Q

Explain utility welfare of money and leisure

A

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

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17
Q

What shifts the market supply curve of labour

A
  • Changes in income
  • Changes in population
  • Changes in expectations (less optimistic about future pensions)
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18
Q

What affects elasticity of supply of labour

A
  • Supply of unskilled is much more elastic than skilled
  • Factors reducing occupational and geographical immobility reduce elasticity
  • Elastic more in LR than SR
  • Availability of unemployed increases elasticity
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19
Q

Define perfectly competitive labour market

A

Just like normal market but includes labour

20
Q

Draw labour market perfect competition with ruining market wage price

A

…

21
Q

What is the maximisation of profit in labour markets

A

Addition to sales revenue resulting from employment=addition of cost for employing extra worker

22
Q

Why does MRP = W

A

Because it is like MR=D or P

23
Q

If
MRP>W
MRP

A

More workers should be hired

Less workers should be hired

24
Q

Define Monopsony

A

One buyer in a market

25
Q

Define monopsony power

A

Marker power exercised in a market home the buyer of a good or service factor

26
Q

Example of monopsony

A

Arguably military

27
Q

Why does MC not equal AC

A

Because to employ additional workers more money must be provided, so all individuals will have to be paid more

28
Q

Draw the determination of wage rate and level of employment in monopsony labour market

A

…

29
Q

Reasons for wage differences

A
  • Disequilibrium trading (constantly changing markets)
  • Imperfect market competition
  • Occupational immobility of labour
  • Geographic immobility of labour
  • Discrimination
30
Q

What can influence wage

A

Trade union

31
Q

Define trade union

A

Group of workers who join together to maintain and improve their conditions of employment, including pay

32
Q

Define collective bargaining

A

A process by which wage rates and other conditions of work are negotiated and agreed upon by unions and an employer

33
Q

What is the argument against unions

A

Cause unemployment

34
Q

What is the opposite argument for trade unions causing unemployment

A

They increase income, causing an increase of disposable income so overall AD is increased

35
Q

Draw a trade union shifting the market supply curve of labour

A

…

36
Q

Draw the introduction of a trade union in monopsony power

A

…

37
Q

Define national minimum wage

A

Minimum wage rate that must be paid by law

38
Q

Advantages of minimum wage rate

A
  • Prevents exploitation
  • Decreases poverty
  • Middle groups between trade union and individuals
39
Q

Disadvantages of minimum wage

A
  • Reduced working hours

- Effects those that are young

40
Q

Define wage discrimination

A

Paying different workers different wage rates for doing the same job

41
Q

Draw wage discrimination

A

…

42
Q

What is necessary for wage discrimination to occur

A

Different identifiable groups

43
Q

Types of wage discrimination

A
  • Gender

- Race

44
Q

Explain Gender discrimination

A
  • Gender pay gap at 14.1%
  • Women are twice as likely to receive lowest pay
  • Woken work predominantly low paid jobs
  • Discrimination
  • Experience less in women due to children
45
Q

Explain how gender discrimination in one market effects another market

A

A decrease in women employed causes an increase in supply of women willing to work in another

46
Q

Draw how gender discrimination effects other labour markets

A

…

Economics (15 decks)

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