EconomicsCode 9708
Labour market forces and government intervention
What this topic asks you to be able to do
- labour demand viewed as a derived demand
- the influences on labour demand within one firm or one particular occupation
- reasons why the labour demand curve shifts and why movement occurs along it, for one firm or one occupation
- the theory of marginal revenue product (MRP): how marginal revenue product is defined and worked out, and how an individual firm's labour demand is derived using marginal revenue product
- what affects how much labour is supplied to a firm or an occupation, both wage and non-wage factors
- what brings about shifts of, and movement along, the labour supply curve facing a firm or an occupation
- wage determination when labour markets are perfect: how the equilibrium wage rate and level of employment are reached
- wage determination in imperfect markets: how trade unions, government (by setting a national minimum wage) and monopsony employers each affect wages and employment in the labour market
- how wage differentials arise from labour market forces
- transfer earnings and economic rent: how each is defined, and the factors that affect both of them in an occupation