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Economics Mock > Labour Market > Flashcards

Labour Market Flashcards

1
Q

labour Markets

A

Firms demand labour and we supply labour

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2
Q

Marginal Physical Product

A

The amount of output produced by each extra worker

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3
Q

Marginal Revenue

A

The additional revenue the firm will get from selling an extra unit of product

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4
Q

Marginal Revenue Product

A

The amount of extra revenue an additional worker will bring to the firm

Marginal Physical Product X Marginal Revenue

Firms demand will be based on a workers MRP

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5
Q

Labour Market Diagram

Perfectly Competitive Market

A

Y-axis is Wage or Wage Rate
X-axis is Quantity of Labour
Supply curve is upwards sloping and equal to Average Cost of Labour
Demand curve is downwards sloping and equal to Marginal Revenue Product of Labour

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6
Q

Labour Market Equilibrium

A

Point where Labour Supply equals Labour Demand

Average Cost of Labour equals the Marginal Revenue Product of Labour

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7
Q

Above Labour Market Equilibrium

A

Excess Supply or Unemployment or Surplus

Labour Supply is greater than Labour Demand

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8
Q

Below Labour Market Equilibrium

A

Excess Demand or Shortage

Labour Demand is greater than Labour Supply

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9
Q

Elasticity of Demand for Labour

A

Measures how responsive demand for labour is to changes in wage

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10
Q

Determinants of Elasticity of Labour Demand

A

PST

Percentage of total cost
Substitutes
Time

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11
Q

Elastic Demand for labour

A

Firms are very responsive to changes in wage

Wages are likely to be lower

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12
Q

Inelastic Demand for labour

A

Firms are unresponsive to changes in wage

Wages are likely to be higher

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13
Q

Elasticity of Supply of Labour

A

Measures how responsive supply of labour is to changes in wage

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14
Q

Determinants of Elasticity of Labour Supply

A

SUT

Skills and Qualifications
Unemployment Levels
Time

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15
Q

Elastic Supply of labour

A

Workers are very responsive to changes in wage

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16
Q

Inelastic Supply of Labour

A

Workers are unresponsive to changes in wage

17
Q

Causes of Shifts in the Labour Demand Curve

A

Productivity
Capital Costs
Derived Demand

(Education and Training - Links to Productivity)

18
Q

Causes of Shifts in the Labour Supply Curve

A

Migration
Income tax and Benefits
Education and Training
Non-Pecuniary Benefits

19
Q

Monopsony

A

A single buyer in a market, for a particular type of labour

20
Q

Monopsony Power

A

Market power exercised in a market with a single buyer

NHS over 90% market share gives them a lot of monopsony power

Economics Mock (11 decks)

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