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A LevelEconomicsAQAExam QuestionsIndividuals, Firms, Markets & Market Failure6. The Labour Market

The Labour Market (AQA A Level Economics): Exam Questions

Exam code: 7136

1 hour14 questions

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6. The Labour Market

1
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Figure 5 shows the market demand for labour (DL = MRPL), the market supply of labour (SL=ACL), and the marginal cost of labour (MCL), in a particular industry. The employer in this industry is a monopsonist.    

q20-paper-3-june-2020-aqa-a-level-economics


  From Figure 5, it can be concluded that, in the absence of a trade union or a minimum wage, the firm will employ                         

  • OQ1 workers at a wage of OW1.

  • OQ2 workers at a wage of OW1.

  • OQ2 workers at a wage of OW2.

  • OQ2 workers at a wage of OW3.

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2
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All other things being equal, which one of the following is most likely to cause the marginal revenue product of labour curve in the shoe manufacturing industry to shift to the right?

  • A decrease in money wage rates in the shoe industry.

  • A decrease in the number of workers employed in the shoe industry.

  • An increase in the market demand for shoes.

  • An increase in the number of firms competing in the shoe industry.

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3
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The diagram below shows the demand and supply curves for skilled labour (Ds and Ss) and unskilled labour (Du and Su) and the wage differential (Ws–Wu) between the two types of labour.

q27-june-2018-aqa-a-level-economics


All other things being equal, which one of the following is most likely to cause a decrease in the wage differential?

  • A fall in the demand for unskilled workers

  • A fall in the size of the labour force

  • An increase in the demand for skilled workers

  • An increase in the proportion of the labour force with a degree

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4
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In a labour market dominated by a monopsonist, wages and employment are usually lower than in a competitive labour market. This is because a monopsonist.

  • employs workers up to the point where the marginal revenue product of labour is equal to the wage rate.

  • is a monopoly supplier of labour.

  • equates the marginal revenue product of labour with its marginal cost not the wage rate.

  • restricts output to raise the price of the product sold.

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5
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The diagram below shows the market for bricklayers.

q4-june-2017-aqa-a-level-economics


The original equilibrium wage is W1 and the number of bricklayers employed is N1. Which one of the following events is most likely to increase the wage paid to bricklayers to W2 and increase employment to N2?

  • A cut in bank rate leading to a fall in mortgage interest rates

  • A fall in the number of young people training as apprentice bricklayers

  • An improvement in working conditions in the construction industry

  • An increase in the wages paid to electricians in the construction industry

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6
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The diagram below represents the market for unskilled agricultural labourers where the demand for agricultural labourers is DL and the supply is SL. The trade union representing agricultural labourers has negotiated a minimum wage of OWmin for its members.

q19-june-2017-aqa-a-level-economics


The effect of implementing a minimum wage of OWmin is that

  • cyclical unemployment increases by (ON3 – ON1).

  • frictional unemployment increases by (ON2 – ON1).

  • real wage unemployment increases by (ON3 – ON1).

  • the natural rate of unemployment increases by (ON2 – ON1).

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