chapter 18 - workers

Question 1

definition of:

wage factors

Answer 1

refer to financial rewards that workers receive in return for their labour services

Question 2

methods of payment

Answer 2

wages 
salary
bonus
commission
piece rate
profit-related pay 
share options 
fringe benefits (pensions, health insurance, company car)

Question 3

list the non-wage factors that affect an individual’s choice of occupation

Answer 3

• level of challenge
• length of training
• career prospect
• level of danger involved
• level of education required
• level of experience required
• recognition in job
• personal satisfaction gained from job

Question 4

wage determined by what?

Answer 4

demand for labour

supply for labour

Question 5

definition of:

demand for labour

Answer 5

num of workers that firms are willing and able to hire at given wage rate

Question 6

definition of:

derived demand

Answer 6

labour is not demanded for itself but for the goods and services it used to produce

Question 7

demand for labour curve

Answer 7

downward sloping curve
wages rate per hour decreases, num of workers demanded increases; firms are more willing and able to hire more workers at a lower wage rate

Question 8

factors affecting demand for labour

Answer 8

• productivity of labour
• level of total demand in economy
• cost of labour

Question 9

definition of:

supply of labour

Answer 9

refers to everyone in the economy who is of working age and is both willing and able to work at different wage rate

Question 10

supply of labour curve

Answer 10

-upward sloping supply curve
wage rate per hour increases, num of workers supplied increases; if wage rate increases, num of workers increases as they’re attracted by higher wages

-backward-bending supply labour curve
wages rate rise to a high enough point to allow people to work less and enjoy more leisure hours

Question 11

definition of:

labour force participation rate

Answer 11

percentage of working population that is working , rather than unemployed

Question 12

labour force participate rate influenced by?

Answer 12

num of women in workforce
retirement age
num of full time and part time workers in labour force
age distribution of workforce

Question 13

factors of supply of labour

Answer 13

• labour force participation rate
• availability and level of welfare benefits
• changing social attitudes (more women enforcing workforce)
• geographical mobility
• occupational mobility

Question 14

equilibrium wage rate

Answer 14

determined when wage rate workers are willing to work for equals the wage rate firms are prepared to pay for; demand for labour equals supply for labour

Question 15

relative bargaining power

Answer 15

• trade union
• level of education
• age and experience

Question 16

definition of:

minimum wage

Answer 16

lowest legal amount any firm can pay its workers and is set by gov

Question 17

min wage

Answer 17

when min wage is set, quantity of labour supplied increases from x to x as they’re willing and prepared to work for higher wage rate. however, quantity of labour demanded decreases from x to x as firms are less able or willing to pay as ,any workers at higher wage rate

Question 18

advantages of min wage?

Answer 18

• incentive for people to work
• receive fair wages and not exploited by employers
• low income earners have more money to spend

Question 19

disadvantages of min wage?

Answer 19

• workers who earn high wages may request for higher wage rate to maintain wage differential between them and those earn low wages
• firms can’t pay wages bill, this reduces demand for labour hence unemployment may increase

Question 20

reasons for differences in earnings

Answer 20

• skilled and unskilled workers
• male and female workers
• primary, secondary and tertiary workers
• private and public sectors workers

Question 21

advantages of division of labour and specialisation?

Answer 21

• workers become expert in field, productivity and efficiency increases
• quality of product increases
• workers become skilful and earning potential increases

Question 22

disadvantages of division of labour and specialisation?

Answer 22

work becomes repetitive and boring
workers become alienated
production process overspecialised; too dependant on an individual worker
workers become deskilled in other areas; lack of flexibility