chapter 40

In competitive market, the demand curve for labour is given by which of the following?

• marginal cost

• marginal physical product

• total revenue product

• marginal revenue product

a minimum wage above the equilibrium wage rate has been introduced in an economy. Which of these is the most likely effect on the economy's labour market?

• all workers who were employed before the introduction of the minimum wage will be employed

• there will be fewer jobs for those who were paid at the former equilibrium wage rate

• there will be more jobs for those who were paid at the former equilibrium wage rate

• more workers will withdraw from the labour market and claim benefits.

which of these is a definition of the transfer earnings paid to labour?

• the minimum payment needed to keep a worker in present employment

• the first week's wage when a worker starts a new job

• the reward for an entrepreneur setting up a new business

• a payment that is made above what is necessary to keep a worker in current employment

A firm's workers join a trade union which negotiates an increase in the workers’ wage rate. The increase in the wage rate results in an increase in the number employed by the firm. What could explain this?

• The demand for the firm’s product is price-elastic.

• The firm is a monopsonist within its local labour market.

• The firm operates in a perfectly competitive labour market.

• There is a high degree of substitutability between capital and labour.

Over a given period, the amount of overtime worked in the manufacturing industry increases. What is likely to be a consequence of this?

• A decrease in employment

• A decrease in the rate of inflation

• A more rapid growth in average earnings than in hourly wage rates

• A more rapid growth in manufacturing output than in productivity

'The addition to revenue which results from employing one additional unit of a factor of production, the quantities of all other factors of production remaining constant.' What does this define?

• Marginal factor cost

• Marginal revenue

• Marginal revenue product

• The law of diminishing returns

What is meant by 'real wages'?

• The marginal physical product of labour

• The opportunity cost of labour

• The purchasing power of money wages

• Wages net of tax

In 2004 union officials and businessmen in Argentina agreed to increase the minimum wage from 350 to 450 pesos. In which circumstances would such a rise increase employment?

• Investment increases at a more rapid rate than consumption.

• Labour and product markets are competitive.

• The higher wage rate produces a proportionately greater rise in labour productivity.

• The minimum wage is set above the equilibrium level.

What would cause a rise in the productivity of labour?

• An increase in indirect taxes

• An increase in the quality of capital

• A rise in consumer surplus

• A rise in the elasticity of supply of labour