Labour Market- Demand,Supply,WELD,WELS,Mobility

Question 1

Define labour demand and labour supply

Answer 1

The quantity of workers that firms are willing to employ at a certain wage rate.

The quantity of workers that are willing to supply labour at a certain wage rate.

Question 2

The demand for labour is a … …
Fill in the blank
(explain the sentence underneath the answer)

Answer 2

DERIVED DEMAND

The demand for labour DERIVES from the good that labour is producing

Question 3

Factors influencing labour demand

Answer 3

-Wage
-Demand for the final product
-Price of other factors of production (e.g. capital)
-Regulations

Question 4

Factors influencing labour supply

Answer 4

-Wage rates
-Mobility of labour (occupational and geographical
-Working age population
-Barriers to entry
-Job satisfaction
-Training/Education

Question 5

Factors influencing wage elasticity of labour demand

Answer 5

-Elasticity of final product (directly proportional)

-Wage costs as a percentage of total costs
(high %,high elasticity)

-Ease and cost of factor substitution

-Time

Question 6

Factors influencing wage elasticity of labour supply

Answer 6

-Skills and qualifications needed for the job
(high skills, more inelastic)

-Mobility of labour (high mobility, more elastic)

-Time

Question 7

Define and give causes of geographical immobility

Answer 7

When workers find it difficult to transfer between different locations for work

Causes:
-family ties
-immigration laws
-high cost of property
-lack of access to high quality schools
-Language barriers
-Cost of transport

Question 8

Define and give causes of occupational immobility

Answer 8

When workers find it difficult to transfer between jobs due to a lack of transferable skills

Causes:
Skills gap
Education Gap
Training Gap
Lack of confidence

Question 9

Government initiatives to correct occupational immobility

Answer 9

-Subsidize training/apprenticeship programs
-Financially support career changes
-Information campaigns
-Industry-specific support

Question 10

Government initiatives to correct geographical immobility

Answer 10

-Improve affordable housing
-Transport infrastructure development
-Relocation assistance
-Remote working support

Question 11

Define and explain MRPL

Answer 11

Marginal Revenue Product of Labour:
The extra revenue generated for the business when one more additional unit of labour is employed

Question 12

Go on sketchpad and draw the MRPL curve

Why is it that shape

Answer 12

Did you remember:
1.It is the opposite shape of the MC curve that you studied in market structures
-Increases then decreases

It is that shape due to THE LAW OF DIMINISHING MARGINAL PRODUCTIVITY

Question 13

What curve is the MRPL curve the same as

Answer 13

LABOUR DEMAND CURVE
(remember that the MRPL curve is straight when it is drawn with other curves, it only has a curve when it is by itself)