Labour market and income inequality

Question 1

when qty of labour supplied = qty of labour demanded, there is no

Answer 1

surplus or shortage

Question 2

How does the demand for labour work?

Answer 2

derived demand

Question 3

What is derived demand

Answer 3

when there is a greater demand for output, the number of workers demanded will be higher.

Question 4

The demand curve will shift when what factors change

Answer 4

the price of the firm’s output
other factor prices
technology

Question 5

When will there be a higher price of the firm’s output?

Answer 5

When there is a greater demand more output

Question 6

When there is a higher price of the firm’s output, firms will be able to sell

Answer 6

more of it at a higher price, increase labour, to prooduce more

Question 7

Prices of factors include

Answer 7

capital

land

Question 8

Factors can be a _____ or _____ to labour

Answer 8

substitute

complement

Question 9

What does technological improvement bring about?

Answer 9

labour productivity

Question 10

WHen there is technological improvement, firms are more willing to pay for

Answer 10

more productive and skilful workers that can handle high tech production

Question 11

What is the supply of labour affected by?

Answer 11

how people wish to allocate their time between work and leisure at different wage rates

Question 12

What is a reservation wage?

Answer 12

it is the lowest wage rate at which they are willing to provide labour

Question 13

The supply of labour is affected by

Answer 13

number of qualified people
the non-wage benefits of costs of the job
the wage rate and non-wage benefits in alternative jobs

Question 14

What are some non-wage benefits of costs of the job

Answer 14

working environment
fringe benefits
status

Question 15

What is a labour union?

Answer 15

organised group of workers

aims to improve welfare of members

Question 16

How does a labour union improve the welfare of members?

Answer 16

wage increase
better working conditions
expanded job opportunities

Question 17

What is the main aim of the labour union?

Answer 17

higher wage rate

Question 18

When can the labour union secure a higher wage rate?

Answer 18

sufficient market power

Question 19

What are the ways to increase wage rate

Answer 19

restricting the supply of labour
imposing a minimum wage
increasing the demand for unionised labour

Question 20

How to restrict the supply of labour?

Answer 20

By having licensing

Question 21

What kinds of licensing are there

Answer 21

examinations to pass

degree programme

Question 22

What are the results of restricting the supply of labour?

Answer 22

higher wage rate

fall in employment

Question 23

Where is the minimum wage imposed?

Answer 23

Above the market equilibrium wage rate

Question 24

What is the result of the minimum wage rate?

Answer 24

surplus of labour (fall in employment)

higher wage rate

Question 25

How does the union bring about greater demand for unionised labour?

Answer 25

sponsoring training schemes encouraging apprenticeship on-the-job training and skills upgrading become more productive increase demand for the good produced (urging consumers)

Question 26

What are the results of increasing demand for unionised labour?

Answer 26

rise in equilibrium wage rate | employment of labour

Question 27

Why is the demand for high skilled labour higher than the demand for low-skilled labour?

Answer 27

At any given level of employment, firms are willing and able to pay high-skilled workers a higher wage rate. because they are more productive

Question 28

Why is the supply for high skilled labour lower than the supply for low-skilled labour?

Answer 28

At any given wage rate, the number of high-skilled workers available for work is lower. requires sacrifice of time and money on the part of the workers to acquire skills

Question 29

The difference in equilibrium wage rate for high-skilled and low-skilled leads to

Answer 29

income inequality

Question 30

What is the curve called to show income inequality

Answer 30

lorenz curve

Question 31

What are the axis of lorenz curve

Answer 31

x-axis: % of population | y-axis: % of income

Question 32

The % of population is ranked from

Answer 32

bottom to top earners

Question 33

The further the line deviates from the line of equality, the higher the

Answer 33

income inequality

Question 34

Will an ageing population worsen income inequality? Why?

Answer 34

Yes Elderly do not work Larger prop of low income households will increase

Question 35

How do you reduce income inequality

Answer 35

welfare benefits training and upgrading schemes higher income tax for higher earners