Labour Market

What determines the equilibrium wage rate in a free market?

• A) Government intervention

• B) Interaction of demand and supply of labour

Derived demand for labour means:

• Demand depends on workers’ preferences

• Demand driven by demand for goods/services

Labour supply primarily comes from:

• Firms hiring workers

• Workers offering their labour

A labour market shortage exists when:

• Wage is above equilibrium

• Wage is below equilibrium

Excess labour supply (unemployment) happens if:

• Wage is below equilibrium

• Wage is above equilibrium

An increase in labour demand typically:

• Raises wage and employment levels

• Raises wage and lowers employment

A fall in labour supply usually:

• Lowers wage

• Raises wage and lowers employment

Which is not a factor influencing labour demand?

• A) Product price

• B) Labour productivity

• C) Worker preferences

Higher labour productivity leads to:

• Higher labour demand

• Lower labour demand

Ability to substitute capital for labour causes:

• Increase in labour demand

• Decrease in labour demand