Labour Market

Question 1

List the factors that influence demand for labour

Just list about 3 and understand the rest

Answer 1

1. Cost of production (Wage)
2. Consumer demand
3. Productivity
4. Product price
5. Non-monetary benefits
6. Tax and benefits
7. Education and training
8. Migration

Question 2

Explain Marginal revenue product of labour (MRPL) and Marginal cost of employing extra labour

Answer 2

Extra profit gained from hiring an extra worker

Question 3

Explain how labour is a derived demand of products

Answer 3

Labour is a factor of production for products

Question 4

What are factors that influence the supply of labour?

Answer 4

1. Real wage (on current company and substitute)
2. barriers to entry (qualifications needed)
3. migration
4. Occupation mobility

Question 5

Factors that influence wage elasticity of labour demand

Answer 5

1. time period
2. Percentage of cost
3. Substitutes

Question 6

Factors that influence wage elasticity of labour supply

Answer 6

1. Time period
2. Skills and qualifications
3. Unemployment rate

Question 7

Define geographical immobility

Answer 7

InAbility of a worker to move from one place to another

Question 8

Define occupational immobility

Answer 8

When workers can’t switch jobs from one to another because they lack the skills needed to

Question 9

What factors influence geographical mobility?

Answer 9

1. Cost of living – Workers might not afford to live in expensive cities.
2. Migration barriers – Visa restrictions or language barriers can stop international movement.
3. Infrastructure – Poor infrastructure limits commuting options.

Question 10

What factors influence occupation mobility?

Answer 10

1. Lack of skills/education – A factory worker may not have the qualifications to become an accountant.
2. Higher Minimum wage