Microeconomics Topic 3 YR2 Flashcards

(24 cards)

1
Q

What is the Marginal Revenue Product of Labour (MRPL)?

A

MRPL = Marginal product of Labour (MPL) x Marginal Revenue (MR). It represents the additional revenue generated by employing one more worker.

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2
Q

What factors influence the supply of labour?

A

Wage rate, non-wage benefits, population and demographics, education and training, substitute employment opportunities, and government policies.

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3
Q

What does the backward-bending labour supply curve show?

A

It shows that at higher wages, workers may choose to work fewer hours due to the income effect outweighing the substitution effect.

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4
Q

What determines wages in a competitive labour market?

A

Wages are determined by the intersection of labour demand and supply, assuming perfect competition.

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5
Q

What is a monopsony labour market?

A

A monopsony is a labour market with a single dominant employer who has wage-setting power.

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6
Q

How do monopsonies affect wages and employment?

A

Monopsonies set wages lower and reduce unemployment compared to competitive markets.

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7
Q

What is the role of trade unions?

A

Trade unions negotiate higher wages, better working conditions, and worker protections through collective bargaining.

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8
Q

What are some reasons for wage differentials?

A

Skill levels, compensating differentials, discrimination, market power, and the elasticity of labour supply.

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9
Q

What is the purpose of minimum wage laws?

A

To reduce poverty and prevent exploitation by ensuring workers receive a basic standard of living.

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10
Q

What are the potential impacts of minimum wage laws?

A

May cause unemployment if set above equilibrium but can improve living standards for low-paid workers.

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11
Q

What is employment protection legislation?

A

Laws designed to protect workers from unfair dismissal and ensure safe working conditions.

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12
Q

What is labour market discrimination?

A

Unfair treatment of workers based on characteristics such as gender, rage, or age, leading to inefficiency and inequity.

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13
Q

What is a skills mismatch?

A

A gap between the skills workers have and those employers need, causing structural unemployment.

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14
Q

What are solutions to labour immobility?

A

Relocation grants, improved access to education, and retraining schemes.

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15
Q

What is the significance of real wages?

A

Real wages reflect the purchasing power of income, adjusted for inflation, and determine living standards.

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16
Q

What is capital-labour substitution?

A

The process where firms replace workers with machinery of technology to reduce costs or increase efficiency.

17
Q

How does economic growth affect labour demand?

A

Economic growth increases demand for goods and services, which raises demand for labour.

18
Q

What is the impact of government subsidies for training?

A

Subsidies improve workers skills and productivity, reducing structural unemployment and increasing long-term efficiency.

19
Q

What are compensating wage differentials?

A

Higher wages offered to compensate for unpleasant or risky job conditions.

20
Q

What is geographical labour immobility?

A

Barriers that prevent workers from moving to different locations for employment, such as high housing costs of family ties.

21
Q

What is occupational labour immobility?

A

Workers’ inability to switch jobs due to a lack of skills required for available positions.

22
Q

What factors influence the demand for labour?

A

Wage rate, labour productivity, price of the final product, substitutes for labour, state of the economy, and government regulation.

23
Q

What is the relationship between wage rate and demand for labour?

A

There is an inverse relationship; higher wages lead to lower demand for labour.

24
Q

What is derived demand for labour?

A

Demand for labour is derived from its contribution to production, not for its own sake.