Edexcel A Level Microeconomics Exam 2024 Questions With Complete solutions!

Factors influencing demand for labour - ANSWERSDemand for final product - if rise in output > increase in productivity Relative productivity of labour to capital - substitution effect £3,000 subsidy for hiring unemployed 18-24 y.o. = half UK's youth minimum wage Factors influencing supply of labour - ANSWERSCost of living Cost of gaining skills UK uni fees capped at £9,250 per year Number of workers UK raises state pension age from 67 to 68 Market failures in labour markets - ANSWERSGeographical immobility - inability of labour to move from one location to another Occupational immobility - inability of labour to move form one industry to another Employer monopsony -> wage-setting power -> wage lower than equilibrium 10% decline in real wages of NHS worker since start of recession Solutions to market failures in labour market - ANSWERSEducation and training Housing market reform Wage-setting UK raises NMW from £7.50 to £7.83 Evaluate solutions to market failures in labour market - ANSWERSIf increases elasticity of S(labour) -> lower wages If D(labour) if elastic -> min wage will increase unemployment Explain wage determination in competitive labour market - ANSWERSFirms are wage takers -> set W where S = D S(labour) is perfectly elastic -> AC = MC -> max profits at MRP = MC -> employ Q₁ Positive statement (def.) - ANSWERSEvidence based statement which can be proven true or false