unit 4: occupation, income and expenditure of individuals

Question 1

list and explain the wage factors affecting an individual’s choice of occupation

Answer 1

wage- remuneration workers receive when they are paid weekly
salary- paymet made on a monthly basis
overtime pay- may be paid to workers who work in excess of a standard working week
bonus- paid to workers who produce above a standard amount, finish a project ahead of time or contribute to higher profits in some other way

Question 2

what are the factors determining earnings?

Answer 2

• level of training and experience to do a particular job
• level of deman and supply that exists for the type of labour you’re skilled, trained and educated to provide

Question 2

list and explain the non-wage factors affecting an individual’s choice of occupation

Answer 2

• fringe benefits: if an individual gets more fringe benefits in one occupation than the other, then they might choose to work there
• no of hours: if an individual gets a job where the wage rate is the same, but the hours are less, then they might choose to work there
• location of working area: if the work is nearby with less pay scales too, they might choose to work there just so they don’t have to travel
• job security

Question 3

explain the wage differentials between occupations

Answer 3

• natural ability: some jobs require a particular natural ability only possessed by a small minority of the population
• education and training: some jobs require long periods of education and special training
• experience: more senior workers receive higher pay than those who just recently joined the profession
• risk jobs: workers may recieve higher pay due to the risk that may be involved

Question 4

differentiate between economic rent and transfer earnings

Answer 4

economic rent- income earned from a factor of production that is greater than the minimum necessary to bring the factor of production into operation

transfer earnings- money transfered from the government to the household without them working for it

Question 6

define earnings, gross personal income,disposable personal income and real income

Answer 6

earnings- income recieved in the form of money which is used to buy goods/services
gross personal income- total personal income from all sources
disposable personal income- amount which remains after gross income after deductions
real income- quantity of goods/services which disposable income(money) can buy

Question 7

what are the advantages and disadvantages of minimum wage?

Answer 7

advantages
- workers receive a fair wage for an hour’s work and aren’t exploited by their employers

disadvantage
- unemployment might increase because frms could recieve higher wage bills as a result of increased wage rates

Question 8

define spending

Answer 8

paying out money to buy or hire goods/services

Question 9

what are the motives of spending?

Answer 9

• to survie
• fulfil their desires
• to maintain a standard of living

Question 10

list factors affecting spending

Answer 10

• lower interest rates
• lower direct and indirect taxation
• inflation

Question 11

define and list the motives of saving

Answer 11

saving- part of income that isn’t spent or kept for future use
motives
- save for retirement
- to buy shares or get capital gains
- to fulfil a particular purpose

Question 12

list factors affecting spending

Answer 12

• interest rates
• rate of inflation
• precautionary factors

Question 13

define and list the motives for borrowing

Answer 13

borrowing- taking money to return back in the future, with/without interest
motives
- pay for expenses or bills
- set up their own business
- to fulfil immediate needs

Question 14

list the factors affecting borrowing

Answer 14

• interest rates
• availability of credit

Question 15

why do people work?

Answer 15

• to earn a salary
• to satisfy their needs and wants
• to maintaind/improve a standard of living