Lecture 10

Question 1

The International Labour Organisation defines the unemployed as people who:

Answer 1

• Were without work during a certain period of time e.g. 4 weeks
• Were available for work e.g. not retired or studying
• Were actively seeking work

Question 2

Labour market model

Answer 2

The model has 2 parts:
1. The labour market (wage setting curve)
2. The product market (price setting curve)

Question 3

The labour market (wage setting curve)

Answer 3

• Determined by relationship between employers and workers
• For every level of employment it give the real wage that workers would like to receive in order to work hard
• The wage setting curve shows the minimum wage that workers are willing to receive in order to work hard

Question 4

The product market (price setting curve)

Answer 4

• Determined by relationship between firms and customers
• It gives the real wage that maximises the firm’s profits

Question 5

Labour union

Answer 5

• An organisation that represents workers interests e.g. negotiating working conditions, working hours and wages
• Employers and trade unions can develop a good working relationship so workers are strongly motivated to work for the firm (union voice effect)