DP1

Question 1

labor market

Answer 1

refers to an institution where those from the household sector are able and willing to work, supply labour (S) to the business sector wanting to buy / demand labour (D) so they can produce g/s.

Question 2

demand for labour

Answer 2

Demand for labour
- Downward / negative slope
- When wages rise, demand for labour contract
- Rise and fall with ad / economic activity

Question 3

supply of labour

Answer 3

• Upward / positive slope
• When rages rise, supply of labour expand.
• Reflects population growth, participation rate, age distribution.

Question 4

Equilibrium wage

Answer 4

• Where quantity of labour demanded, and quantity of labour supplied are exactly equal.
• Meaning neither a market surplus nor market shortage

Question 5

Examples & how increase in each affect demand for labour & equilibrium wage

Answer 5

• Level of consumer demand for g/s
• Number of businesses wanting to buy labour
• Labour efficiency
• Level of business profitability
• Substitutes for labour available

Question 6

Examples & how increase in each affect demand for labour & equilibrium wage

Answer 6

• Demographics, population structure, participation rate in labour force
• Net immigration rates
• Rate of natural increase in population
• Peoples work-life balance
• Government policy (welfare access, pension age)
• Trade unions

Question 7

stronger labour market conditions

Answer 7

• Might be cause by rising economic activity / onset of boom.
• Demand for labour rises relative to supply.
• Wages tend to increase faster, people work longer hours / labour shortages appear.

Question 8

Ideal labour market conditions:

Answer 8

• Should neither be too strong causing labour shortages / wage price inflation
• Should neither be too weak where unemployment and lower income depress living standards
• Australis goal of full employment 4.0-4.5 percent of labour force

Question 9

Weaker labour market conditions:

Answer 9

• Might be caused by a slowdown or recession.
• Demand for labour falls relative to supply.
• Wage rises more slowly or perhaps even fall and people work fewer hours / become unemployed