Microeconomics Topic 3 YR2 Flashcards
(24 cards)
What is the Marginal Revenue Product of Labour (MRPL)?
MRPL = Marginal product of Labour (MPL) x Marginal Revenue (MR). It represents the additional revenue generated by employing one more worker.
What factors influence the supply of labour?
Wage rate, non-wage benefits, population and demographics, education and training, substitute employment opportunities, and government policies.
What does the backward-bending labour supply curve show?
It shows that at higher wages, workers may choose to work fewer hours due to the income effect outweighing the substitution effect.
What determines wages in a competitive labour market?
Wages are determined by the intersection of labour demand and supply, assuming perfect competition.
What is a monopsony labour market?
A monopsony is a labour market with a single dominant employer who has wage-setting power.
How do monopsonies affect wages and employment?
Monopsonies set wages lower and reduce unemployment compared to competitive markets.
What is the role of trade unions?
Trade unions negotiate higher wages, better working conditions, and worker protections through collective bargaining.
What are some reasons for wage differentials?
Skill levels, compensating differentials, discrimination, market power, and the elasticity of labour supply.
What is the purpose of minimum wage laws?
To reduce poverty and prevent exploitation by ensuring workers receive a basic standard of living.
What are the potential impacts of minimum wage laws?
May cause unemployment if set above equilibrium but can improve living standards for low-paid workers.
What is employment protection legislation?
Laws designed to protect workers from unfair dismissal and ensure safe working conditions.
What is labour market discrimination?
Unfair treatment of workers based on characteristics such as gender, rage, or age, leading to inefficiency and inequity.
What is a skills mismatch?
A gap between the skills workers have and those employers need, causing structural unemployment.
What are solutions to labour immobility?
Relocation grants, improved access to education, and retraining schemes.
What is the significance of real wages?
Real wages reflect the purchasing power of income, adjusted for inflation, and determine living standards.
What is capital-labour substitution?
The process where firms replace workers with machinery of technology to reduce costs or increase efficiency.
How does economic growth affect labour demand?
Economic growth increases demand for goods and services, which raises demand for labour.
What is the impact of government subsidies for training?
Subsidies improve workers skills and productivity, reducing structural unemployment and increasing long-term efficiency.
What are compensating wage differentials?
Higher wages offered to compensate for unpleasant or risky job conditions.
What is geographical labour immobility?
Barriers that prevent workers from moving to different locations for employment, such as high housing costs of family ties.
What is occupational labour immobility?
Workers’ inability to switch jobs due to a lack of skills required for available positions.
What factors influence the demand for labour?
Wage rate, labour productivity, price of the final product, substitutes for labour, state of the economy, and government regulation.
What is the relationship between wage rate and demand for labour?
There is an inverse relationship; higher wages lead to lower demand for labour.
What is derived demand for labour?
Demand for labour is derived from its contribution to production, not for its own sake.
