The labour market

Question 1

Derived demand

Answer 1

when demand for labour is driven by demand for goods

Question 2

marginal productivity theory

Answer 2

the demand for any factor of production depeneds on MRP

Question 3

MRPL

Answer 3

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

Question 4

MRPL equation

Answer 4

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

Question 5

Marginal cost of labour

Answer 5

the cost of hiring one additional worker

Question 6

MPPL and MRPL curve

Answer 6

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

Question 7

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

Answer 7

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

Question 8

Elasticity of demand for labour

Answer 8

The change in demand when wage level changes

Question 9

elasticity of demand for labour equation

Answer 9

changes in quantity demanded by change in wage rate

Question 10

Factors influencing elasticity of demand for labour

Answer 10

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

Question 11

Individual labour supply

Answer 11

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

Question 12

Occupational labour supply

Answer 12

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

Question 13

Occupational labour supply graph

Answer 13

As wage rate increases for an occupation quantity of labour increases

the supply curve slopes upwards

Question 14

Subsitution effect

Answer 14

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

Question 15

Individual supply curve

Answer 15

if theres a higher wage rate workers work fewer hours

quantity of labour decreases as wages rise

Question 16

Income effect

Answer 16

people choose to work less even through wage rate increases

Question 17

Monetary benefits

Answer 17

the weflare a worker gains from the wage they recieve

Question 18

Non monetary

Answer 18

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

Question 19

Wage differentials

Answer 19

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

Question 20

Nominal wages

Answer 20

the amount people are paid

Question 21

real wage

Answer 21

This takes into account inflation and purchasing power of wages

Question 22

Reasons for wage differentials

Answer 22

workers that are skilled are paid more

wages vary in different regions or industries

trade unions

Question 23

High human capital

Answer 23

having high skills or exprience to offer an employer

Question 24

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

Answer 24

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

the curve is elastic

Question 25

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

Answer 25

maxmise profits at MRPL=MCL

Question 26

Monopsony

Answer 26

when theres only one buyer

Question 27

Monopsony labour market

Answer 27

when theres a single employer

Question 28

wage and employment levels in a monopsony

Answer 28

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

Question 29

trade union

Answer 29

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

Question 30

Purpose of trade union

Answer 30

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

Question 31

Collective bargaining

Answer 31

When a trade union negotiates with an employer

Question 32

productivity bargains

Answer 32

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

Question 33

effects of trade unions in perfectly competitive markets

Answer 33

forces wages higher but quantity employed falls it causes an oversupply of workers causing unemployment and labour market failure

Question 34

Bilateral monopoly

Answer 34

when theres a single buyer and single seller

Question 35

effects on wages and quantity of labour in a monopsonist

Answer 35

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

Question 36

Wage discrimination

Answer 36

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

Question 37

Labour market discrimination

Answer 37

workers being discriminated against based on differences in gender and race

Question 38

Wage discrimination advantages and disadvantages-for workers

Answer 38

advantages-wage costs will decrease bringing more demand for jobs disadvantage-force wages down, exploitation of vunerable workers

Question 39

Wage discrimination advantages and disadvantages-employers

Answer 39

Advantages-reduce costs for wages which increase profits Disadvantages-industrial unrest

Question 40

Economy

Answer 40

advantages-increased employment level caused by increased demand disadvantage-increased ineqaulity

Question 41

NMW

Answer 41

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

Question 42

Effects of national minimum wage

Answer 42

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

Question 43

advantages of a national minimum wage

Answer 43

reduces level of poverty boost of morale to workers incentive to be employed increase in tax revenue

Question 44

disadvantage of a national minimum wage

Answer 44

increase wage costs for firms causing unemployment decrease competitiveness increase in prices causing inflation