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Demand for and supply of labour

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  • What is meant by derived demand?
    Demand for labour depends on demand for the goods and services workers produce.
  • How can trade unions influence wages?
    They may negotiate for higher wages and better working conditions.
  • What happens if wages are above equilibrium?
    Labour surplus/unemployment.
  • What usually happens if wages increase?
    Demand for labour decreases, supply of labour increases.
  • Using a DL and SL diagram, show an effect of worsening working conditions on the labour market.
  • Give two factors that can decrease the demand for labour.
    Recession / automation / lower demand for products.
  • What is meant by the supply of labour?
    The number of workers willing and able to work at different wage rates.
  • Using a DL and SL diagram, show an effect of a better education on the labour market.
  • What is meant by a wage rate?
    The amount paid to a worker for their labour.
  • Give two factors that can increase the demand for labour.
    Higher demand for products / economic growth / increased productivity.
  • Why might firms reduce labour demand after introducing machines?
    Machines can replace workers.
  • What is the equilibrium wage rate?
    The wage where demand for labour equals supply of labour.
  • Using a DL and SL diagram, show an effect of an increased automation on the labour market.
  • What is geographical mobility of labour?
    The ability of workers to move between locations for work.
  • What happens if wages are below equilibrium?
    Labour shortage.
  • Why may labour demand increase during economic growth?
    Firms produce more and need more workers.
  • What is meant by the demand for labour?
    The number of workers firms are willing and able to hire at different wage rates.
  • Give one non-financial factor affecting labour supply.
    Working conditions / job satisfaction / flexible hours.
  • How can higher productivity affect wages?
    More productive workers may earn higher wages.
  • Why may highly skilled workers earn higher wages?
    Their skills are scarce and more productive.
  • What is occupational mobility of labour?
    The ability of workers to move between jobs.
  • Why are doctors usually paid more than shop assistants?
    Doctors require more training and skills and are in shorter supply.
  • Give one reason why labour supply in a job may be low.
    Long training period / dangerous work / poor working conditions.
  • Using a DL and SL diagram, show an effect of an increased immigration on the labour market.
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