ECS2604
ASSIGNMENT 4
DUE DATE: 20 APRIL 2026
, ECS2604 ASSIGNMENT 4 2026
DUE 20 APRIL 2026
QUESTION 1
1.1 Explain, with the aid of a figure, the impact of labour demand elasticity on
employment because of a wage increase in the unionised sector.
When a trade union successfully negotiates a wage increase above the market-clearing
level, the impact on employment is not fixed; it depends entirely on how sensitive
employers are to the wage change. This sensitivity is measured by the elasticity of
demand for labour (Yu, 2018, ch. 5).
Te extent to which unions affect employment by increasing the cost of labour depends
on the elasticity of the demand for labour (ECS2604 Summarised Notes, p. 17).
ASSIGNMENT 4
DUE DATE: 20 APRIL 2026
, ECS2604 ASSIGNMENT 4 2026
DUE 20 APRIL 2026
QUESTION 1
1.1 Explain, with the aid of a figure, the impact of labour demand elasticity on
employment because of a wage increase in the unionised sector.
When a trade union successfully negotiates a wage increase above the market-clearing
level, the impact on employment is not fixed; it depends entirely on how sensitive
employers are to the wage change. This sensitivity is measured by the elasticity of
demand for labour (Yu, 2018, ch. 5).
Te extent to which unions affect employment by increasing the cost of labour depends
on the elasticity of the demand for labour (ECS2604 Summarised Notes, p. 17).
