ECS2604 2025 ASSIGNMENT SEM 1 2025 ECS2604 2025
DISCLAIMER
THE DOCUMENT PRESENTED IS A DEMOSTRATION ON HOW STUDENTS CAN
APPROACH THE ASSIGNMENT FOR ECS2604. IT IS BASED ON PRESCRIBED
MATERIAL AND EXTERNAL RESEARCH. THE DOCUMENT CONTAINS BOTH
SHORT NOTES AND A RESPONSE EXAMPLE FOR EACH QUESTION.
STUDENTS ARE THEREFORE ADVISED NOT TO COPY AND PASTE BUT USE
THE DOCUMENT AS A RESEARCH GUIDE THAT WOULD HELP THEM DRAFT
THEIR OWN FINAL COPIES.
,ECS2604 2025 ASSIGNMENT SEM 1 2025 ECS2604 2025
QUESTION 1 [25 Marks]
1.1 Using examples, illustrate how the labour market differs from the goods
market. (5 marks)
The labour market, while operating on the basic principles of supply and demand,
differs significantly from the goods market in several key aspects. Here are some
illustrations
Nature of what is traded: In the goods market, tangible products are bought and sold.
For example, a consumer buys a loaf of bread or a car. In contrast, the labour market
involves the exchange of a person's services and time, not the person themselves. An
example is a company hiring an accountant for their financial expertise and work. The
company is purchasing the accountant's labour services, not the accountant as a
physical product.
Human element: Goods are inanimate objects, whereas labour is provided by human
beings. This introduces principles of fairness, equity, and humaneness that are
intrinsic to the labour market. For instance, labour laws exist to ensure safe working
conditions and fair treatment, considerations that are not typically applied to the
'treatment' of a loaf of bread.
Complexity of price: The price in the goods market is usually straightforward (the
monetary cost of the item). While wages are a key component of the price of labour,
the overall cost of using labour is more complex. It can include fringe benefits (like
health insurance or pension contributions), and is influenced by factors such as
inflation, personal taxation, and the standard of living (Fitzgerald, 2024). For example,
two seemingly identical job offers might have different total labour costs for the
employer due to variations in benefits packages or tax implications for the employee
(Weiss, 2023).0717513144
Bargaining power: In many goods markets, individual consumers have limited power
to influence the price of goods, especially in perfectly competitive markets (Servais,
2024). However, in the labour market, there can be significant differences in
bargaining power between an individual worker and an employer, particularly when
unemployment is high (Beuthe, 2021). For example, a single unskilled worker may
have little leverage to negotiate for higher wages, whereas a large corporation has
considerable power as a potential employer (Umema & Japee, 2024). This unequal
, ECS2604 2025 ASSIGNMENT SEM 1 2025 ECS2604 2025
power dynamic is often addressed through legislation allowing workers to form unions
for collective bargaining (Salvatore, 2020).
Functions beyond exchange: While the primary function of a goods market is the
exchange of goods, the labour market also plays crucial roles in allocating human
resources among different sectors and distributing income (Fitzgerald, 2024). For
instance, the wage levels in the healthcare sector influence how many individuals
choose to pursue careers in medicine or nursing, thereby allocating human capital
(Umema & Japee, 2024). Similarly, the wages earned by individuals contribute to the
overall distribution of income in an economy (Angeles, 2011).
1.2 Differentiate between normative and positive economics and use examples
to illustrate it. (4 marks)
Positive economics deals with "What is?", focusing on factual and descriptive
statements about the economy (Servais, 2024). It aims to explain economic
phenomena as they are, without incorporating value judgments. These statements can
be tested or disproven by examining evidence (Angeles, 2011). Examples related to
the labour market from the sources include:
"What is the total number of unemployed in 2024?".
"What is the youth unemployment rate in 2024?".
"What is the impact of the imposition of a minimum hourly wage of R30 on employment
in the hospitality sector?".
These are all questions that can be answered by collecting and analysing data about
the labour market. The answers would describe existing conditions or predict the likely
consequences of a specific action, without stating whether these outcomes are good
or bad.
Normative economics, on the other hand, is concerned with "What should be?",
involving value judgments and opinions about what is desirable or undesirable in the
economy (Salvatore, 2020). It goes beyond mere description and offers prescriptions
for economic policy. Normative statements cannot be proven or disproven by facts
alone, as they are based on ethical or moral beliefs (Angeles, 2011). Examples of
normative questions related to the labour market from the sources
include:0717513144
DISCLAIMER
THE DOCUMENT PRESENTED IS A DEMOSTRATION ON HOW STUDENTS CAN
APPROACH THE ASSIGNMENT FOR ECS2604. IT IS BASED ON PRESCRIBED
MATERIAL AND EXTERNAL RESEARCH. THE DOCUMENT CONTAINS BOTH
SHORT NOTES AND A RESPONSE EXAMPLE FOR EACH QUESTION.
STUDENTS ARE THEREFORE ADVISED NOT TO COPY AND PASTE BUT USE
THE DOCUMENT AS A RESEARCH GUIDE THAT WOULD HELP THEM DRAFT
THEIR OWN FINAL COPIES.
,ECS2604 2025 ASSIGNMENT SEM 1 2025 ECS2604 2025
QUESTION 1 [25 Marks]
1.1 Using examples, illustrate how the labour market differs from the goods
market. (5 marks)
The labour market, while operating on the basic principles of supply and demand,
differs significantly from the goods market in several key aspects. Here are some
illustrations
Nature of what is traded: In the goods market, tangible products are bought and sold.
For example, a consumer buys a loaf of bread or a car. In contrast, the labour market
involves the exchange of a person's services and time, not the person themselves. An
example is a company hiring an accountant for their financial expertise and work. The
company is purchasing the accountant's labour services, not the accountant as a
physical product.
Human element: Goods are inanimate objects, whereas labour is provided by human
beings. This introduces principles of fairness, equity, and humaneness that are
intrinsic to the labour market. For instance, labour laws exist to ensure safe working
conditions and fair treatment, considerations that are not typically applied to the
'treatment' of a loaf of bread.
Complexity of price: The price in the goods market is usually straightforward (the
monetary cost of the item). While wages are a key component of the price of labour,
the overall cost of using labour is more complex. It can include fringe benefits (like
health insurance or pension contributions), and is influenced by factors such as
inflation, personal taxation, and the standard of living (Fitzgerald, 2024). For example,
two seemingly identical job offers might have different total labour costs for the
employer due to variations in benefits packages or tax implications for the employee
(Weiss, 2023).0717513144
Bargaining power: In many goods markets, individual consumers have limited power
to influence the price of goods, especially in perfectly competitive markets (Servais,
2024). However, in the labour market, there can be significant differences in
bargaining power between an individual worker and an employer, particularly when
unemployment is high (Beuthe, 2021). For example, a single unskilled worker may
have little leverage to negotiate for higher wages, whereas a large corporation has
considerable power as a potential employer (Umema & Japee, 2024). This unequal
, ECS2604 2025 ASSIGNMENT SEM 1 2025 ECS2604 2025
power dynamic is often addressed through legislation allowing workers to form unions
for collective bargaining (Salvatore, 2020).
Functions beyond exchange: While the primary function of a goods market is the
exchange of goods, the labour market also plays crucial roles in allocating human
resources among different sectors and distributing income (Fitzgerald, 2024). For
instance, the wage levels in the healthcare sector influence how many individuals
choose to pursue careers in medicine or nursing, thereby allocating human capital
(Umema & Japee, 2024). Similarly, the wages earned by individuals contribute to the
overall distribution of income in an economy (Angeles, 2011).
1.2 Differentiate between normative and positive economics and use examples
to illustrate it. (4 marks)
Positive economics deals with "What is?", focusing on factual and descriptive
statements about the economy (Servais, 2024). It aims to explain economic
phenomena as they are, without incorporating value judgments. These statements can
be tested or disproven by examining evidence (Angeles, 2011). Examples related to
the labour market from the sources include:
"What is the total number of unemployed in 2024?".
"What is the youth unemployment rate in 2024?".
"What is the impact of the imposition of a minimum hourly wage of R30 on employment
in the hospitality sector?".
These are all questions that can be answered by collecting and analysing data about
the labour market. The answers would describe existing conditions or predict the likely
consequences of a specific action, without stating whether these outcomes are good
or bad.
Normative economics, on the other hand, is concerned with "What should be?",
involving value judgments and opinions about what is desirable or undesirable in the
economy (Salvatore, 2020). It goes beyond mere description and offers prescriptions
for economic policy. Normative statements cannot be proven or disproven by facts
alone, as they are based on ethical or moral beliefs (Angeles, 2011). Examples of
normative questions related to the labour market from the sources
include:0717513144
