Economics - 0455 CIE

Workers

Overview

Why does a surgeon earn many times more than a cleaner, and why does a minimum wage law help some workers but risk leaving others without a job at all? The answers lie in the labour market, where the same forces of demand and supply that set the price of goods also set the price of work: the wage.

In this lesson you will explore the wage and non-wage factors that shape people's choice of job, what drives the demand for and supply of labour, how trade unions bargain for their members, and how a national minimum wage works. You will also draw and interpret labour-market diagrams that examiners ask for again and again.

Objectives

wage and non-wage factors
influences of the demand for labour and the supply of labour
trade unions and their relative bargaining power
government policy, including national minimum wage (NMW)
drawing and interpretation of diagrams that illustrate the effects of: - changes in demand and supply in the labour market - national minimum wages

Lesson Note

Most people earn their living by selling their labour, so the labour market decides how the income of an economy is shared out. Understanding it explains why wages differ between jobs, why governments set minimum wages, and why unions exist. It also gives you a second arena in which to use demand and supply analysis, this time with the wage as the price.

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Lesson Evaluation

Congratulations on completing the lesson on Workers. Now that youve explored the key concepts and ideas, its time to put your knowledge to the test. This section offers a variety of practice questions designed to reinforce your understanding and help you gauge your grasp of the material.

You will encounter a mix of question types, including multiple-choice questions, short answer questions, and essay questions. Each question is thoughtfully crafted to assess different aspects of your knowledge and critical thinking skills.

Use this evaluation section as an opportunity to reinforce your understanding of the topic and to identify any areas where you may need additional study. Don't be discouraged by any challenges you encounter; instead, view them as opportunities for growth and improvement.

The demand for labour is described as a derived demand because labour is wanted for: A. its own sake B. the goods and services it produces C. the wages it pays D. the taxes it raises Answer: B
Which of the following is a non-wage factor affecting choice of occupation? A. the hourly wage B. the annual bonus C. the level of job satisfaction D. commission earned Answer: C
A national minimum wage is normally set: A. below the equilibrium wage B. above the equilibrium wage C. exactly at the equilibrium wage D. at zero Answer: B
Surgeons earn high wages mainly because: A. the supply of surgeons is low and demand is high B. the supply of surgeons is high C. the demand for surgeons is low D. surgery requires no training Answer: A
A trade union's bargaining power is likely to be greatest when: A. the economy is in recession B. the firm is highly profitable and workers are hard to replace C. union membership is very low D. jobs are scarce Answer: B