Wage Determination (Demand and Supply of Labour) Flashcards

1️⃣ Familiarise yourself with the flashcards:

  • Look through all the flashcards to see what's on both sides.
  • Make sure you understand the information on each card. If something's unclear, click the link to the revision notes at the bottom of the page for more details.

2️⃣ Test yourself:

  • Look at the question or prompt on each card and try to remember the answer before flipping it over.
  • Check the answer and make a note of any cards you find challenging and need to go over more.

3️⃣ Consistently Review and Practice:

  • Use spaced repetition: spend more time on the cards you struggle with and go over them more often.
  • Regularly review all the flashcards to help you better understand and retain the information over time.

Note: We may include questions that have multiple correct answers. It's useful to remember specific examples to understand these concepts better.

PERSONALISED 1-TO-1 TUTORING

Need more help on this topic? Get 1-to-1 support

Get support with clear explanations, practice and feedback (Ages 5 to 16).

  • DBS-checked tutors
  • Flexible times
  • Parents can be updated

Want an ad-free experience? Subscribe to remove ads

What sets the wage rate in a competitive labour market?

The wage is set by demand and supply of labour. The market wage is where they are equal.

What is demand for labour?

It is how many workers firms are willing and able to hire at each wage. It depends on demand for the goods and services workers help make.

Name two factors that can increase the demand for labour.

Higher demand for the product and higher worker productivity.

How can cheaper machines affect demand for labour when machines can replace workers?

If machines get cheaper, firms use more machines. Demand for labour falls.

What is supply of labour?

It is how many people are willing and able to work at each wage in a job or market.

Name two factors that can increase the supply of labour for a job.

A larger working-age population and better working conditions.

What is the equilibrium wage?

The wage where the quantity of labour demanded equals the quantity supplied.

If demand for labour rises and supply stays the same, what happens to wage and employment?

The wage rises and employment rises.

If the supply of labour falls and demand stays the same, what happens to wage and employment?

The wage rises and employment falls.

What is the wage elasticity of demand for labour?

It measures how much employers change the number of workers they hire when the wage changes. It is higher when workers are easy to replace with machines.

What is the wage elasticity of supply of labour?

It measures how much the number of people willing to work changes when the wage changes. It is lower for jobs that need long training.