Igcse Economics Study Chapter 11

Front 1

1. What is a wage?

Back 1

1. A wage is the price of labour

Front 2

2. What is a labour market?

Back 2

2. A labour market is a market that exists when there is a demand and supply for labour.

Front 3

7. What is productivity?

Back 3

7. Productivity refers to the amount of output that is produced from a given input of resources.

Front 4

3. What determines the demand for labour? Give 3 reasons.

Back 4

3. The demand for labour is a derived demand, meaning that labour is required to produce goods and services. When consumers wants rise for products, so does the demand for more labour so the demand for the product can meet the supply. In the opposite, when the want of a product falls, so does the demand of labour.
The quantity of labour demanded is also determined by the wage rate. Where if a firm employs a worker whos additional output to the firm is worth equal or more than his wage, then it is profitable to hire him. The additional output or the value of a worker is referred to as the marginal revenue product of labour.
The quantity of labour demanded also depends on technology. Therefore if machinery is cheaper and more efficient, then the demand for labour falls.

Front 5

8. What is the average product of labour?

Back 5

8. Total output / Total number of employees.

Front 6

4. What is the working population?

Back 6

4. The working population consists of people who are employed, self employed and unemployed.

Front 7

9. Why do firms want to raise productivity and how do they do it?

Back 7

9. Firms want to improve productivity so that they increase production without spending additional funds on additional factors of production, therefore their profits will increase.
They can use several methods to increase productivity:
They can offer additional bonuses to productive labour
They can train their labour to be more efficient
Encourage employees to buy shares, and if they increase productivity, they will receive more from the shares.
They can also replace old capital with new capital.
They can also improve the working environment

Front 8

5. What are Real Wages?

Back 8

5. The salary of the worker.

Front 9

10. What is a trade union?

Back 9

10. A trade union is an organization that represents the worker’s interests. Its main aim is to raise wages and improve working conditions for its members (workers).

Front 10

6. What are wage differentials and why do they occur? Give 6 reasons.

Back 10

6. Wage differentials are the different salaries every person receives. One reason may be their abilities and qualifications, dirty jobs, satisfaction (meaning they like to work in a specific occupation regardless of wage), lack of information, immobility (not being able to move closer to better jobs) and fringe benefits (companies offer perks to workers).

Front 11

11. Give the 4 types of trade union.

Back 11

11. General Unions represent workers from different occupations and industries.
Industrial Unions represent workers in the same industry.
Craft Unions represent workers with the same skill across several industries.
Non Manual unions/Staff associations represent workers in the professional and commercial jobs.

Front 12

12. Give 2 methods a trade union uses to influence wages

Back 12

12. Negotiating Single Union Agreement is when a trade union will represent workers in a particular place of work. Employers benefit with negotiating with only one union.
Restricting Membership to Skilled workers
Agreeing to improve productivity.