The Labour Market Flashcards

1
Q

What type of demand is labour?

A

Derived demand

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2
Q

What does the marginal productivity theory say?

A

The demand for any factor of production depends on its marginal revenue product (MRP)

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3
Q

What is marginal revenue product?

A

The extra revenue gained by the firm from employing one more worker

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4
Q

What is the formula for marginal revenue product?

A

MRP = MPP X MR

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5
Q

What is the marginal physical product of labour(MPP)?

A

The output produced by each additional worker

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6
Q

What is the marginal cost of labour?

A

The cost of hiring one additional worker

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7
Q

When does a firm have an optimal number of workers?

A

When MRP of labour is equal to MC of labour

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8
Q

When is a firm employing too few workers?

A

When MRP of labour is greater than MC of labour

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9
Q

When is a firm employing too many workers?

A

When MRP of labour is less than MC of labour

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10
Q

What is a firm’s demand for labour generally affected by?

A

Productivity

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11
Q

What do high unit costs suggest?

A

There is low productivity

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12
Q

What is an individual’s labour supply?

A

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

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13
Q

What is the labour supply for an occupation?

A

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

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14
Q

What is supply of labour in the long run determined by?

A

Monetary and non-monetary factors

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15
Q

What is a monetary benefit?

A

The welfare a worker gains from the wage they receive

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16
Q

What is a non-monetary benefit?

A

Welfare a worker can gain from non wage benefits of the jobs. For example, employee discount, flexible working hours

17
Q

What factors can affect supply of labour?

A

-Working population
-Competitiveness of wages
-Publicising of jobs opportunities

18
Q

What type of job is supply of labour elastic for?

A

Low skilled jobs

19
Q

What type of job is supply of labour inelastic for?

A

Skilled jobs

20
Q

What are wage differentials?

A

The differences in wages between different groups of workers, or between workers in the same occupation

21
Q

What are the the reasons for wage differentials?

A
  • Amount skill required
  • Region
  • Trade Unions
22
Q

What is a trade union?

A

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

23
Q

What are the aims of a trade unions?

A

Bargain with employers for:
- Better pay
- Better working conditions
- Job security

24
Q

What are productivity bargains?

A

When unions agree to specific changes that will increase productivity in return for higher wages or other benefits

25
Q

What is a downside of trade unions?

A

The negotiations for better wages may lead to increase unemployment, as firms cannot afford to keep all the workers at the increased wage

26
Q

What is wage discrimination?

A

When employers with monopsony power pay different wage rates based on different workers willingness to supply labour

27
Q

What is labour market discrimination?

A

When workers are being discriminated against for differences in things like gender or race

28
Q

What are the advantages of wage discrimination?

A
  • Costs get lower, meaning increased demand for labour, providing more jobs
  • Reduces the cost of wages, which can lead to higher profits
29
Q

What are the disadvantages of wage discrimination?

A
  • Can lead to exploitation of vulnerable workers
  • Additional administration for employers
  • Inequality
30
Q

What happen to employers as a result of discrimination?

A

They incur increased costs

31
Q

What happen to the government as a result of discrimination?

A

Worker have lower wages so they can pay less tax, which decrease tax revenue for the government

32
Q

What is the national minimum wage?

A

A legal minimum hourly rate of pay for different age groups

33
Q

What are the advantages of a national minimum wage?

A
  • Help those on low incomes, reduce poverty
  • Boost morale of workers as they are getting better wages
  • Greater incentive to become employed
  • Government tax revenue is greater
34
Q

What are the disadvantages of a national minimum wage?

A
  • Increase wage costs, increased unemployment
  • Decrease competitiveness of UK firms that have higher wages compared to firms in other countries with lower wages
  • Increased wage costs may be passed on to price, inflation increase