Labour Markets

Question 1

Define the demand for labour

Answer 1

How many workers an employer is willing and able to hire at a given wage rate in a given time period

Question 2

Give two factors influencing the demand for labour

Answer 2

Worker productivity, cost of capital

Question 3

Define derived demand

Answer 3

Demand for labour dependent on demand for final goods and services that workers produce

Question 4

Define supply of labour

Answer 4

Number of workers willing and able to work at any given wage rate

Question 5

Give two factors influencing the supply of labour

Answer 5

Quality of education/training, migration

Question 6

Give two benefits of a minimum wage

Answer 6

Prevent low wages and poverty, prevent unemployment trap

Question 7

Give two downsides of a minimum wage

Answer 7

Leads to a surplus of workers, need to reflect cost of living so will be different in different regions which is hard to enforce

Question 8

Define PED of labour

Answer 8

Responsiveness of demand for labour to a change in wages

Question 9

Define price elasticity of labour supply

Answer 9

Responsiveness of labour supply to a change in the wage rate