Labour Markets

Question 1

What can cause labour demand curve to shift outwards?

Answer 1

• Increased consumer demand
• Increased labour productivity
• Lower capital productivity
• Foreign competition
• Government employment subsidies

Question 2

What does an elastic labour demand curve mean?

Answer 2

Labour demand does not respond much to change in wage rate.

Question 3

The wage elasticity of demand depends on what?

Answer 3

• The price elasticity of demand of final product
• Proportion of costs spent on labour
• Ease and cost of factor substitution

Elastic means a change in the wage rate results in a large change in labour demand.

Question 4

Characteristics of a price elastic product?

Answer 4

Price elastic product:
- Large labour costs
- Easy factor substitution
- Long-run

Question 5

What is meant by labour supply?

Answer 5

Labour supply is the amount of labour workers are willing to offer at a given wage rate.

Question 6

What can cause the labour supply curve to shift outwards?

Answer 6

• Better working conditions
• More non-monetary benefits
• Lower wage in substitute jobs
• Lower barriers to entry
• Higher population

Question 7

What effects the wage elasticity of supply?

Answer 7

• Skill levels required
• Amount of training required
• Time frame

Question 8

What does an elastic wage elasticity of supply mean?

Answer 8

Elastic means a change in the wage rate results in a large change in the labour supply.

Question 9

Characteristics of an elastic wage elasticity of supply?

Answer 9

• Low skill
• Low training requirement
• Long-run

Question 10

What does an elastic wage elasticity of demand mean?

Answer 10

Elastic means a change in the wage rate results in a large change in labour demand.