The Labour Market | AQA A-Level Economics (7136)
The Labour Market
- 144 questions
- 7 subtopics
- Paper 1: Markets and market failure, and available on Paper 3
- Paper 1 and Paper 3
The labour market is examined on Papers 1 and 3.
It applies demand and supply to labour, then examines what happens when the market is imperfect: monopsony employers, trade unions, a minimum wage and discrimination.
Sample questions from The Labour Market
Answer each one closed book first, then open the answer.
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The demand for labour and marginal productivity theory
Calculate the marginal revenue product of labour when marginal physical product of labour = 30 units, marginal revenue = £24.
Show the answer
Marginal revenue product of labour = 30 × 24 = £720. -
The demand for labour and marginal productivity theory
How might a fall in the price of capital machinery affect the demand for labour?
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If capital is a substitute for labour, cheaper capital shifts the demand for labour to the left as firms substitute capital for workers. If capital is complementary, it could shift labour demand to the right. -
The supply of labour
How can changes in the size of the working population affect the labour supply curve for an occupation?
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An increase in the working population shifts the labour supply curve to the right; a decrease shifts it to the left. -
The supply of labour
What is the principle of comparative advantage?
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A country or individual has a comparative advantage in producing a good if they can produce it at a lower opportunity cost than another country or individual. -
Wage determination in competitive labour markets
State the formula for the marginal cost of labour in a perfectly competitive labour market.
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MCₗ = W, where MCₗ is the marginal cost of labour and W is the wage rate. -
Wage determination in competitive labour markets
If the supply of labour in a perfectly competitive market decreases, what happens to wages and employment?
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A decrease in labour supply raises the equilibrium wage rate and lowers the level of employment. -
Wage determination in imperfectly competitive labour markets
What is the relationship between the marginal cost of labour curve and the average cost of labour curve for a monopsonist?
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The marginal cost of labour curve lies above the average cost of labour (supply) curve. -
Wage determination in imperfectly competitive labour markets
What shape is the MRP curve in a monopsony labour market diagram?
Show the answer
The MRP (marginal revenue product) curve is downward-sloping.
The 7 subtopics
One subtopic is one session. Work down the list.
| Subtopic | What it covers | Questions |
|---|---|---|
| The demand for labour and marginal productivity theory | Marginal revenue product, why labour demand slopes downward, and what makes it elastic. | 20 |
| The supply of labour | Monetary and non-monetary factors, migration, the size of the working population, and elasticity of supply. | 24 |
| Wage determination in competitive labour markets | The marginal cost of labour, the profit-maximising level of employment, and shifts in demand and supply. | 23 |
| Wage determination in imperfectly competitive labour markets | Monopsony, imperfect information and immobility, and how they change the wage and employment outcome. | 17 |
| Trade unions and wage determination | Union bargaining power, what strengthens and weakens it, and the effect on wages and jobs. | 16 |
| The National Minimum Wage | The case for it on poverty, inequality and incentives, and the case against it on jobs, prices and competitiveness. | 22 |
| Discrimination in the labour market | Taste-based and statistical discrimination, occupational segregation, and the efficiency cost. | 22 |
How the guide is worked
Answering a question from memory stores it far better than reading the answer again. The guide runs that as a fixed procedure on one subtopic at a time, about twenty minutes a session.
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Step 1 · Closed book
Cover the answers. Work through one subtopic and write down what you can. Leave blanks where you have nothing.
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Step 2 · Open book
Go back to the top. Read each printed answer and write it out in full, including the ones you had right.
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Step 3 · Closed book again
Same questions, same order, from memory. The gap between pass one and pass three is the session result.
Read the full method, the return schedule and the research behind it.
Nearby topics
AQA A-Level Economics Active Recall Guide
Every topic, not just this one. 2,344 questions with their answers.