ECS2604/2/2024
Labour Economics
ECS2604
Assignment 4 Second Semester
Department of Economics
IMPORTANT INFORMATION:
This document contains Questions to Assessment 04.
, ECS2604/2/2024
Question 1 [20]
1. When the labour demand curve shifts rightwards, at the new equilibrium,
(a) there is no change in wage.
(b) the wage decreases.
(c) the wage increases.
(d) the labour supply curve also shifts rightwards.
(e) the labour supply curve shifts leftwards.
2. The hourly wage of Thandi decreases from R150 to R100. What will happen to her budget line?
(a) Gets steeper.
(b) Shifts up without changing its slope.
(c) Shifts downwards.
(d) Becomes flatter. (e) Remains the same
3. Assume company XYZ increases retirement benefits for its employees, what is the effect on the
budget line?
(a) Shift down the budget line without affecting its slope.
(b) Shift up the budget line.
(c) Shift down the budget line.
(d) Remains the same. (e) Steepen the budget line, affecting its slope.
4. Assuming that for Mimi the substitution effect is stronger than the income effect, which of the
following applies to her?
(a) She will work more hours and her labour supply will increase.
(b) She will work few hours and her labour supply will decrease.
(c) She will work few hours and enjoy more leisure.
(d) She will be indifferent between putting in more hours or enjoying more leisure time.
(e) The information provided is not enough to determine the effect.
5. Assume Elegance.co makes 6500 garments each week and the total number of employees amount
to 1500. Due to the outbreak of COVID-19, there is a fall in demand for garments as "'none-
essential" businesses are closed during the lockdown season. Mashudu sees it fit to cut down their
working hours to 70%. What is labour productivity?
Labour Economics
ECS2604
Assignment 4 Second Semester
Department of Economics
IMPORTANT INFORMATION:
This document contains Questions to Assessment 04.
, ECS2604/2/2024
Question 1 [20]
1. When the labour demand curve shifts rightwards, at the new equilibrium,
(a) there is no change in wage.
(b) the wage decreases.
(c) the wage increases.
(d) the labour supply curve also shifts rightwards.
(e) the labour supply curve shifts leftwards.
2. The hourly wage of Thandi decreases from R150 to R100. What will happen to her budget line?
(a) Gets steeper.
(b) Shifts up without changing its slope.
(c) Shifts downwards.
(d) Becomes flatter. (e) Remains the same
3. Assume company XYZ increases retirement benefits for its employees, what is the effect on the
budget line?
(a) Shift down the budget line without affecting its slope.
(b) Shift up the budget line.
(c) Shift down the budget line.
(d) Remains the same. (e) Steepen the budget line, affecting its slope.
4. Assuming that for Mimi the substitution effect is stronger than the income effect, which of the
following applies to her?
(a) She will work more hours and her labour supply will increase.
(b) She will work few hours and her labour supply will decrease.
(c) She will work few hours and enjoy more leisure.
(d) She will be indifferent between putting in more hours or enjoying more leisure time.
(e) The information provided is not enough to determine the effect.
5. Assume Elegance.co makes 6500 garments each week and the total number of employees amount
to 1500. Due to the outbreak of COVID-19, there is a fall in demand for garments as "'none-
essential" businesses are closed during the lockdown season. Mashudu sees it fit to cut down their
working hours to 70%. What is labour productivity?
