individual labour supply

Question 1

indiviudal labour supply and factors which affect

Answer 1

-key choice between work and leisure
-income effect: as wages go up, incomes rise, or if you reach TARGET INCOME and wages rise, they are negative
-subsitiution effect: as wages rise, opportunity cost of leisure time increases, providing incentive

Question 2

individual labour supply curve and why

Answer 2

-goes in then out
-y: real wage, x hours worked
-initially, positive income and substitution effect
-then, sub positive, rates at which working more slows down as target income being reached
-finally, curve bends back, substitution effect positive but income effect negative

Question 3

labour supply curve

Answer 3

industry:
-y real wage, x quantity
-supply curve normal, assume as wages go up, another factor comes in: incentive to rejoin

individual firms
1) perfect comp:
-wage takes, AC=MC=S

2)monopsony (sole/dominant employer)
-supply curve is upward sloping with AC
-MC increases higher

Question 4

shifts of labour supply curve

Answer 4

-wage on offer in subsitute occupations
-barriers to entry (qualifications)
-non-monetary characteristics (healthcare funding, ability to work overseas, company car)
-improvements in occupational mobility
-overtime
-size of working pop
-value of leisure time

Question 5

elasticity of labour supply and factors

Answer 5

-measures the responsiveness of labour supplied to a change in the wage rate

-nature of skills required: high then it is inelastic
-length of training period, high, high inelastic
-vocation: don’t do teaching for monetary benefit
-time: don’t neccesarily see such a big impact in the sr: time to apply, this it may be temp