M 12

Question 1

What is demand for labour?

Answer 1

The demand for labour is a derived demand because the demand for labour is dependent on the goods and services it produces and not for labour itself

Question 2

Show and explain the demand for labour

Answer 2

Demand fir labour is a disgrace downward sloping curve as the wage decreases from w1 to w2 the number of workers increases as the firms can afford to Employ more workers at a lower wage

Question 3

Factors affecting the demand for labour

Answer 3

1. The aggregate demand (total demand) in the economy. In a period of growth demand will be higher than during a recession
2. Increases in productivity of workers through training, changes in production methods and incentives to make the workers more motivated
3. Cost of labour compared to the cost of machinery and technology. Some jobs can be replaced by machines, these are expensive but can cut costs in the long run

Question 4

What is national minimum wage

Answer 4

Lower that a firm can pay to a worker set by the government and any employer trying to pay less, will be breaking the law

Question 5

Draw a diagram showing the national minimum wage and explain it

Answer 5

Before the minimum wage n1 workers were demanded at wage w1. The supply increases to n2 because more workers will want to work for a higher wage. The demand on the other hand falls to n3 because employers can afford less workers at a higher wage, this could cause unemployment if set too high

Question 6

Advantages of NMW

Answer 6

1. Workers receive a fair wage and are not exploited by their employers
2. Incentive for unemployed people to work
3. Lower income earners will have more income to spend and this will help the economy

Question 7

Disadvantages of NMW

Answer 7

1. Workers who earn more than min wage may want higher pays to keep difference in pay, this will increase wages costs to the firm
2. Firms. Ay not be able to afford the higher wages and so demand for labour will fall. The firms may decide to buy more machinery to replace the workers, causing technological unemployment in the economy.

Question 8

What is the supply of labour?

Answer 8

Consists of people of working age and who are willing and able to work, doesn’t include people who are in full time education or choose not to work.

Question 9

Factors affecting supply of labour

Answer 9

1. Availability and level of social benefits. If unemployment benefits are too high/easily available it will discourage workers from working
2. Since more woman are working and delaying having kids there aww less births therefor an aging population, this affects workforce
3. Geographical mobility is the willingness to relocate to another part of the country for work or because the cost of living of the other location is too high.
4. Occupational mobility is the ease with which a person can change from one job to another. This depends on the cost and time it would take to train for another job

Question 10

Draw and explain wage determination

Answer 10

Equilibrium wage rate in an industry is where the wage rate workers are willing to work for the same the wage that employers are willing to pay. So demand for labour equals supply of labour. Changes in demand or supply of labour will affect the equilibrium wage rate

Question 11

What is the role of trade unions in the labour market?

Answer 11

They protect workers rights. Employers aim at maximise profits and reduce costs, employees want good wages a safe workplace and non-wage benefits, job securities, good work conditions.

Question 12

What can trade unions do?

Answer 12

1. Bargain with employers for wage increases and better conditions
2. Ensure that equipment is safe and employees are trained to use it
3. Provide legal advice to members when needed
4. Support member who are made redendunt
5. Provide financial support to members when these are unfairly dismissed
6. Persuad govt to pass legislation for better work conditions, such as increases in min wage.