4.1.6

Question 1

define MRPL
(Marginal Revenue Productivity of Labour)

Answer 1

extra revenue generated when an additional worker is employed

Question 2

equation of MRPL?

Answer 2

MPPL(Marginal Physical Product of Labour) (+ Price) or (Marginal Revenue) = MRPL

Question 3

why does MRPL curve shift/increase?

Answer 3

increase in productivity (e.g. tech, training, specialisation, division of labour)

Question 4

why could the MRPL shift to the left?

Answer 4

Technology could decrease demand for workers and their labour

Question 5

what affects the elasticity of demand for labour

Answer 5

the elasticity of demand for products
how easy it is to substitute another factor of production for labour
the proportion of labour costs to total costs of production

Question 6

define monopsony

Answer 6

market with only 1 buyer

buyer has buying + wage setting power over potential employees

Question 7

examples of monopsony employers?

Answer 7

NHS
Armed Forces
Retailers 
Supermarkets 
Local councils 
Big Out-Sourcing Businesses e.g. G4S, capita

Question 8

define collective bargaining

Answer 8

negotiation between employees and employers to help make agreements on things like salaries/conditions/benefits

Question 9

define trade union

Answer 9

association of workers whose primary objective is to promote its members and their rights/interests

Question 10

what’s closed shop?

Answer 10

you can only work for a certain employer if you join a certain trade union

Question 11

what’s a single union agreement?

Answer 11

agreement between an employer and a union so that the union will represent all the workers at a particular workplace

Question 12

what’s the benefits trap?

Answer 12

when some people don’t work and find it better to live off benefits

Question 13

advantages of NMW

Answer 13

greater welfare for workers
reduces income inequality
makes labour more productive
gives incentive to work

Question 14

disadvantages of NMW

Answer 14

increasing NMW risks unemployment increase

If NMW is above W*/equilibrium

Question 15

define NMW

Answer 15

legally protected pay floor in labour markets

employers can’t pay below it

Question 16

define discrimination

Answer 16

the valuation in the market-place of personal characteristics of the worker that are unrelated to worker productivity

Question 17

what are the conditions for discrimination?

Answer 17

• be able to identify diff. groups of workers supplying the same type of labour
• the group doesn’t have a lot of knowledge in the Labour Market
• it’s not easy for the group to go to another employer

Question 18

what are the problems with discrimination?

Answer 18

• causes deadweight welfare loss -> certain workers unemployed
• if forms have monopoly/monopsony power -> discr. lets them cut costs but get more profit at workers’ expense
• in competitive markets -> firms experience higher costs which increases prices for consumers
• causes injustice/alienation -> strikes

Question 19

define MPPL (Marginal Physical Product of Labour)

Answer 19

extra output that an extra worker produces

Question 20

MCL (Marginal Cost of Labour)

Answer 20

cost of hiring 1 extra worker