ECS2604 - Labour Economics Assignment 01 Year 2021 TL001

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, ASSIGNMENT 01/2021 (Super Semester)

ECS2604 ASSIGNMENT 01
YEAR 2021

Question 1.1 is based on the following diagram which represents equilibrium in a perfectly
competitive labour market.




[1] At point e wages equal demand for labour
[2] At point e the market is in equilibrium
[3] Workers are perfectly mobile seeking better wages
[4] There is perfect competition between employees and employers
[5] All the above are correct

The labor market is in equilibrium when supply equals demand; e workers are employed at a wage of
W2. In equilibrium, all persons who are looking for work at the going wage can find a job

1.2 Which one of the following is not viewed as a characteristic of a perfectly competitive labour
market?
[1] There is full and perfect knowledge of the market.
[2] Workers and employers are entirely rational.
[3] Workers are perfectly mobile.
[4] There is perfect competition.
[5] Employees and employers have an influence over the market wage.

A perfectly competitive labour market will have the following feature:
 Many firms
 Perfect information about wages and job conditions
 Firms are offering identical jobs
 Many workers with same skills