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Micro economics > The labour market > Flashcards

The labour market Flashcards

1
Q

Derived demand

A

when demand for labour is driven by demand for goods

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2
Q

marginal productivity theory

A

the demand for any factor of production depeneds on MRP

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3
Q

MRPL

A

Marginal revenue product of labour the extra revenue gained for employing one more worker

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4
Q

MRPL equation

A

MPPL(marginal physical product of labour) times by MR (Marginal revenue)

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5
Q

Marginal cost of labour

A

the cost of hiring one additional worker

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6
Q

MPPL and MRPL curve

A

Slope downwards because of law of dimishing returns which means as each worker is employed output falls

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7
Q

Cause of shifts in the demand curve of labour(MRPL Curve)

A

Changes in price- if price falls it will decrease firms demand for labour shifting MRPL to the left

changes in labour productivity-if theres new training and technology it will increase productivity shifting MRPL to the right

Changes to the cost of labour-if costs increase it will decrease demand and shift MRPL to the right

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8
Q

Elasticity of demand for labour

A

The change in demand when wage level changes

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9
Q

elasticity of demand for labour equation

A

changes in quantity demanded by change in wage rate

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10
Q

Factors influencing elasticity of demand for labour

A

the ability to replace labour it will be more elastic if they can replace labour

if labour can be subsituted it can be elastic

the proportion of wage in firms costs if theres a large proportion then it will be elastic

the PED of the product the more elastic it is then more elastic labour is

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11
Q

Individual labour supply

A

The total number of hours a person is willing to work at a given wage rate

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12
Q

Occupational labour supply

A

The number of workers willing to work in that occupation at a given wage rate

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13
Q

Occupational labour supply graph

A

As wage rate increases for an occupation quantity of labour increases

the supply curve slopes upwards

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14
Q

Subsitution effect

A

as wages rise the opportunity cost of leisure time increases which means workers have incentive to subsitute leisure time with work

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15
Q

Individual supply curve

A

if theres a higher wage rate workers work fewer hours

quantity of labour decreases as wages rise

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16
Q

Income effect

A

people choose to work less even through wage rate increases

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17
Q

Monetary benefits

A

the weflare a worker gains from the wage they recieve

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18
Q

Non monetary

A

the welfare a worker gains from non wage benefits example, employee discounts

19
Q

Wage differentials

A

the differences in wages between groups of workers or between workers in the same occupation

20
Q

Nominal wages

A

the amount people are paid

21
Q

real wage

A

This takes into account inflation and purchasing power of wages

22
Q

Reasons for wage differentials

A

workers that are skilled are paid more

wages vary in different regions or industries

trade unions

23
Q

High human capital

A

having high skills or exprience to offer an employer

24
Q

equilibruim wage rate and employment rate in a perfectly competitive market-whole market

A

individuals are price takers as they have no power to influence wages so they accept rulling wage

the curve is elastic

25
Q

equilibruim wage rate and employment rate in a perfectly competitive market-individual firms

A

maxmise profits at MRPL=MCL

26
Q

Monopsony

A

when theres only one buyer

27
Q

Monopsony labour market

A

when theres a single employer

28
Q

wage and employment levels in a monopsony

A

Marginal cost of labour is above average cost of labour because if a worker is hired they have to pay a higher wage to attract them and increase existing wages

they will have higher workers to maxmise profits at MRPL=MCL

29
Q

trade union

A

an organisation formed to represent the interests of a group of workers

30
Q

Purpose of trade union

A

to bargain with employers for better pay, better working conditions and job security

31
Q

Collective bargaining

A

When a trade union negotiates with an employer

32
Q

productivity bargains

A

where unions agree to specific changes that will increase wages for higher productivity

33
Q

effects of trade unions in perfectly competitive markets

A

forces wages higher but quantity employed falls

it causes an oversupply of workers causing unemployment and labour market failure

34
Q

Bilateral monopoly

A

when theres a single buyer and single seller

35
Q

effects on wages and quantity of labour in a monopsonist

A

it increases wages and changes supply from ACL to MCL and increase employment

36
Q

Wage discrimination

A

when employers with monopsony power put different wages rates based on workers willingness to supply labour

37
Q

Labour market discrimination

A

workers being discriminated against based on differences in gender and race

38
Q

Wage discrimination advantages and disadvantages-for workers

A

advantages-wage costs will decrease bringing more demand for jobs

disadvantage-force wages down, exploitation of vunerable workers

39
Q

Wage discrimination advantages and disadvantages-employers

A

Advantages-reduce costs for wages which increase profits

Disadvantages-industrial unrest

40
Q

Economy

A

advantages-increased employment level caused by increased demand

disadvantage-increased ineqaulity

41
Q

NMW

A

national minimum wage which is the legal minimum hourly rate which prevents the exploitation of workers

42
Q

Effects of national minimum wage

A

more equitable distribution of income

encourages people to get a job

increased supply due to increased participation

help to tackle poverty

lead to contraction in demand

43
Q

advantages of a national minimum wage

A

reduces level of poverty

boost of morale to workers

incentive to be employed

increase in tax revenue

44
Q

disadvantage of a national minimum wage

A

increase wage costs for firms causing unemployment

decrease competitiveness

increase in prices causing inflation

Micro economics (8 decks)

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