Week 15 Flashcards
why are most labour supply curves upwards sloping
due to the substitution effect
what is the income effect
how does a backwards bending supply curve of labour show the income and substitution effect (application)
what does the backwards bending supply curve explain (analysis)
what are the cons of the backwards bending supply curve (evaluation)
what are the 4 assumptions of perfectly competitive labour markets
perfectly competitive market graph
perfectly competitive market excess supply
perfectly competitive market excess demand
what does increase in labour productivity cause to shift and what happens to wage and labour
evaluation on perfectly competitive labour market graphs
the precise effects of a shift depends on the elasticity
elastic supply of labour: low skilled job anyone can fill
inelastic supply of labour: high skilled job like accountant
what does higher net migration cause to shift and how does it effect the wage and employment rate
how does labour demand and supply diagrams can be used to explain wage differentials
markets with elastic supply are lower skilled so low demand and will be payed less (high level of employment)
markets with inelastic supply are in high demand so will be payed highly (low level of employment)
how can you show total labour force and voluntary unemployment on a perfectly competitive labour market diagram
transfer earnings definition
economic rent definition
economic rent and transfer earnings shown on a perfectly competitive labour market graph
