Unit 6 - The Labour Market

Question 1

Derived demand

Answer 1

Demand for a good or factor of production, wanted not for its own sake, but as a concert the demand for something else.

Question 2

Marginal physical product of labour

Answer 2

The addition to a firms total output brought about by employing one more worker.

Question 3

Marginal revenue product of labour

Answer 3

The money value of the addition to a firms total output brought about by employing one more worker.

Question 4

Elasticity of demand for labour

Answer 4

Proportionate change in demand for labour following a change in the wage rate. The elasticity can be calculated by using the following formula:
Proportionate change in quantity of labour demanded/ proportionate change in the wage rate.

Question 5

Elasticity of supply of labour

Answer 5

Proportionate change in the supply of labour following a change in the wage rate. The elasticity can be calculated by using the following formula:
Proportionate change in quantity of labour supplied/ proportionate change in the wage rate.

Question 6

Average cost of labour

Answer 6

Total wage costs divided by the number of workers employed.

Question 7

Marginal cost of labour

Answer 7

The addition to a firms total cost of production resulting from employing one more worker.

Question 8

Monopoly

Answer 8

There is only one buyer in a market.

Question 9

Monopsony power

Answer 9

The market peer exercised in a market by the buyer of a good or the services of a factor of production such as labour, even though the firm is not a pure monopsonist.

Question 10

Occupational immobility of labour

Answer 10

When workers are unwilling or unable to move from one type of job to another, e.g. because different skills are needed.

Question 11

Geographical immobility of labour

Answer 11

When workers are unwilling or unable to move from one area to another in search of work.

Question 12

Trade union

Answer 12

A group of workers who join together to maintain and improve their conditions of employment, including their pay.

Question 13

Collective bargaining

Answer 13

A process by which wage rates and others conditions of work are negotiated and agreed upon by a union or unions with an employer or employers.

Question 14

National minimum wage

Answer 14

A minimum wage or wage rate that must by law be paid to employees, though in many labour markets the wage rate paid by employers is above the national minimum wage.

Question 15

Wage discrimination

Answer 15

Paying different workers different wage rates for doing the same job.