Wage Determination and Labour Market Intervention
93 questions· page 1 of 10
A government’s aim is to reduce real wage rates.
Which policy should be used to achieve this aim?
Options
A Award public sector workers pay increases below the rate of inflation.
B Encourage private sector pay awards to be in line with company profits.
C Introduce a minimum hourly wage for non-unionised, low-paid workers.
D Remove any restrictions on trade unions to bargain for wages.
A teacher currently earns $30 000. She would be willing to continue in that teaching job, provided she earned at least $25 000. Also, she would prefer to remain a teacher than change to her next best alternative employment as an accountant where she could earn $40 000.
Which statement is correct?
Options
A Her economic rent as a teacher is $5000.
B Her economic rent as an accountant is $10 000.
C Her transfer earnings as a teacher are $30 000.
D Her transfer earnings as an accountant are $15 000.
The diagram shows the impact on the labour market of the introduction of a national minimum wage (MW).
What do the distances XY and YZ represent?
Options
| XY | YZ | |
|---|---|---|
| A | increase in employed workers | existing workers made redundant |
| B | existing workers made redundant | unemployed new entrants |
| C | existing workers made redundant | increase in employed workers |
| D | unemployed new entrants | existing workers made redundant |
The diagrams show the demand for and supply of labour.
Which two areas represent economic rent?
Options
A 1 and 3
B 1 and 4
C 2 and 3
D 2 and 4
The diagram shows the labour market for a profit maximising industry with a monopsony employer.
What will decrease if a minimum wage of W1 is introduced?
Options
A economic rent
B transfer earnings
C unemployment
D wages
The diagrams show the demand for and supply of labour.
Which two areas represent transfer earnings?
Options
A 1 and 3
B 1 and 4
C 2 and 3
D 2 and 4
Which policy will help to reduce income inequality?
Options
A to increase indirect taxes
B to increase trade union power
C to increase the rate of interest
D to reduce welfare payments
The diagram shows the impact on the labour market of the introduction of a national minimum wage (MW).
What do the distances XY and YZ represent?
Options
| XY | YZ | |
|---|---|---|
| A | increase in employed workers | existing workers made redundant |
| B | existing workers made redundant | unemployed new entrants |
| C | existing workers made redundant | increase in employed workers |
| D | unemployed new entrants | existing workers made redundant |
The diagrams show the demand for and supply of labour.
Which two areas represent economic rent?
Options
A 1 and 3
B 1 and 4
C 2 and 3
D 2 and 4
What determines the amount by which employment is reduced if a minimum wage is set 5% above the equilibrium market wage?
Options
A the average revenue product curve
B the marginal revenue product curve
C the mobility of labour
D the wage rate in other industries