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Their demand depends on the value of the output those workers can produce."},{"text":"Workers/employees demand labour.","correct":false,"explanation":"Workers are the suppliers of labour because they offer their time and skills in return for wages. Firms or employers demand labour by hiring them."},{"text":"Consumers/households demand labour.","correct":false,"explanation":"Consumers mainly demand goods and services, creating an indirect influence on employment. Firms or employers directly demand labour to produce the goods and services consumers want."},{"text":"Trade unions demand labour.","correct":false,"explanation":"Trade unions represent workers and negotiate over wages and conditions, but they do not generally hire labour. Firms or employers demand labour from workers."}]},{"id":"b6af5e8c-39ea-4619-8ce2-ed65ce310ba5","cardType":"basic","points":1,"front":"In a labour market, who supplies labour?","back":"Workers supply labour.","mcqOptions":[{"text":"Workers supply labour.","correct":true,"explanation":"Workers supply labour by offering their time, effort and skills to employers in exchange for wages and other benefits."},{"text":"Firms supply labour.","correct":false,"explanation":"Firms demand labour because they hire people to produce goods and services. Workers supply labour by offering their time and skills in exchange for wages."},{"text":"Consumers supply labour.","correct":false,"explanation":"People may be both consumers and workers, but their role as consumers is to demand products. Workers specifically supply labour to firms in return for wages."},{"text":"Trade unions supply labour.","correct":false,"explanation":"Trade unions represent and bargain on behalf of workers but do not supply the labour themselves. Individual workers supply their time, effort and skills."}]},{"id":"3725baf5-568b-4e01-ae05-1cb78ae4874c","cardType":"cloze","points":null,"front":"The equilibrium wage occurs where labour demand [ ] labour supply.","back":"The equilibrium wage occurs where labour demand equals labour supply.","mcqOptions":[{"text":"equals","correct":true,"explanation":"The equilibrium wage is found where the quantity of labour demanded equals the quantity of labour supplied, leaving neither a labour shortage nor a labour surplus."},{"text":"exceeds","correct":false,"explanation":"When labour demand exceeds labour supply, there is a labour shortage rather than equilibrium. Equilibrium occurs when labour demand equals labour supply."},{"text":"falls below","correct":false,"explanation":"When labour demand falls below labour supply, there is excess labour and downward pressure on wages. Equilibrium occurs where labour demand equals labour supply."},{"text":"is less elastic than","correct":false,"explanation":"Relative elasticity affects how strongly quantities respond to wage changes, but it does not define equilibrium. The equilibrium wage occurs where labour demand equals labour supply."}]},{"id":"1384f8e9-f88e-43ea-8eeb-e50a63db0cf0","cardType":"basic","points":2,"front":"Why does labour demand usually slope downwards?","back":"Higher wages make workers more expensive, so firms demand fewer.","mcqOptions":[{"text":"Higher wages make workers more expensive, so firms demand fewer.","correct":true,"explanation":"A higher wage raises the cost of employing each worker. Other things being equal, firms therefore reduce the quantity of labour demanded as the wage rate rises."},{"text":"Higher wages make workers more productive, so firms demand more.","correct":false,"explanation":"A higher wage does not automatically raise worker productivity. It directly increases employment costs, so firms normally demand fewer workers as the wage rate rises."},{"text":"Higher wages make workers less expensive, so firms demand more.","correct":false,"explanation":"This reverses the effect of a wage increase on firms’ costs. Higher wages make labour more expensive, so firms normally reduce the quantity of labour demanded."},{"text":"Higher wages make workers more profitable, so firms demand more.","correct":false,"explanation":"Higher wages raise costs and can reduce the profit generated by employing an additional worker. Firms therefore usually demand fewer workers at higher wage rates."}]},{"id":"51165c92-77cf-4413-9087-7ad6604c3ba3","cardType":"cloze","points":null,"front":"Labour demand is [ ] because it depends on demand for the [ ] workers produce.","back":"Labour demand is derived demand because it depends on demand for the final goods or services workers produce.","mcqOptions":[{"text":"Labour demand is derived demand because it depends on demand for the final goods or services workers produce.","correct":true,"explanation":"Firms hire workers to produce goods and services rather than for labour’s own sake. Demand for labour is therefore derived from demand for the resulting output."},{"text":"Labour demand is direct demand because it depends on demand for the final goods or services workers produce.","correct":false,"explanation":"Dependence on demand for workers’ output makes labour demand derived, not direct. Firms employ labour because consumers demand the final goods or services it helps produce."},{"text":"Labour demand is derived demand because it depends on demand for the wages and salaries workers produce.","correct":false,"explanation":"Wages and salaries are payments to workers, not the output they produce. Labour demand is derived from demand for the final goods or services workers help create."},{"text":"Labour demand is direct demand because it depends on demand for the labour services workers produce.","correct":false,"explanation":"This confuses labour input with the output sold by firms. Labour demand is derived demand because it depends on demand for the final goods or services produced."}]},{"id":"6c5591c7-9c17-43f3-a6eb-8c2765a70c15","cardType":"basic","points":1,"front":"What happens to labour demand if demand for the final product rises?","back":"Labour demand increases - the curve shifts right.","mcqOptions":[{"text":"Labour demand increases - the curve shifts right.","correct":true,"explanation":"Greater product demand raises the value of workers’ output, encouraging firms to employ more labour at every wage rate. The entire labour demand curve shifts right."},{"text":"Labour demand decreases - the curve shifts left.","correct":false,"explanation":"This reverses the derived-demand relationship. Higher demand for the final product encourages greater production and employment, so labour demand increases and its curve shifts right."},{"text":"Labour demand stays unchanged - there is no shift.","correct":false,"explanation":"Labour demand is derived from demand for the final product, so it cannot remain unchanged when product demand rises. Labour demand increases and shifts right."},{"text":"Quantity of labour demanded increases - movement down the curve.","correct":false,"explanation":"A movement along the curve results from a wage-rate change, not a change in product demand. Rising product demand shifts the whole labour demand curve right."}]},{"id":"790d7d08-23a7-4182-bb43-3fa19c4b39f9","cardType":"basic","points":1,"front":"What happens to labour demand if workers become more productive?","back":"Labour demand increases - the curve shifts right.","mcqOptions":[{"text":"Labour demand increases - the curve shifts right.","correct":true,"explanation":"More productive workers generate more output and revenue for each hour employed. Firms are therefore willing to hire more labour at every wage rate, shifting demand right."},{"text":"Labour demand decreases - the curve shifts left.","correct":false,"explanation":"This wrongly treats higher productivity as reducing workers’ value. Greater productivity raises workers’ potential contribution to revenue, so labour demand increases and shifts right."},{"text":"Labour demand stays unchanged - there is no shift.","correct":false,"explanation":"Productivity is a non-wage determinant of labour demand. When workers become more productive, their value to firms rises, increasing labour demand and shifting the curve right."},{"text":"Quantity of labour demanded increases - movement down the curve.","correct":false,"explanation":"Movement down a labour demand curve is caused by a lower wage rate. Higher productivity instead changes demand at every wage, shifting the entire curve right."}]},{"id":"43a5bcec-fcb5-4726-a7da-cdc2049e0158","cardType":"cloze","points":null,"front":"A wage-rate change causes a [ ] a labour curve; a non-wage change causes a [ ].","back":"A wage-rate change causes a movement along a labour curve; a non-wage change causes a shift.","mcqOptions":[{"text":"A wage-rate change causes a movement along a labour curve; a non-wage change causes a shift.","correct":true,"explanation":"The wage rate is represented on the curve’s vertical axis, so its change causes movement along the curve. Other determinants change the whole relationship, causing a shift."},{"text":"A wage-rate change causes a shift a labour curve; a non-wage change causes a movement along.","correct":false,"explanation":"This reverses the two effects. A wage-rate change causes movement along a labour curve, while a change in a non-wage determinant shifts the whole curve."},{"text":"A wage-rate change causes a movement along a labour curve; a non-wage change causes a movement along.","correct":false,"explanation":"Only a change in the wage rate causes movement along the curve. A non-wage determinant changes labour demand or supply at every wage rate, producing a shift."},{"text":"A wage-rate change causes a shift a labour curve; a non-wage change causes a shift.","correct":false,"explanation":"A wage-rate change does not shift a labour curve because wages are measured on its axis. It causes movement along, while non-wage changes cause shifts."}]},{"id":"61dd83a8-47a3-465a-a9b0-3012289b6288","cardType":"basic","points":2,"front":"If labour demand shifts right and supply slopes upward, what happens to wage and employment?","back":"

Wage rises.
Employment rises.

","mcqOptions":[{"text":"

Wage rises.
Employment rises.

","correct":true,"explanation":"A rightward shift of labour demand creates excess demand at the original wage. Competition for workers raises the equilibrium wage and increases the equilibrium quantity of labour employed."},{"text":"

Wage falls.
Employment rises.

","correct":false,"explanation":"This confuses a rise in labour demand with an increase in labour supply. Greater labour demand raises both the equilibrium wage and employment when labour supply slopes upwards."},{"text":"

Wage rises.
Employment falls.

","correct":false,"explanation":"This mistakes movement along the supply curve for falling employment. A higher wage encourages more labour to be supplied, so employment rises alongside the wage."},{"text":"

Wage falls.
Employment falls.

","correct":false,"explanation":"This describes the likely effect of a leftward, not rightward, shift in labour demand. Increased demand raises the equilibrium wage and level of employment."}]},{"id":"70dc51f9-1c89-4e14-8af9-438e16d5b37f","cardType":"basic","points":2,"front":"Why does labour supply usually slope upwards?","back":"Higher wages make work more rewarding, attracting more labour.","mcqOptions":[{"text":"Higher wages make work more rewarding, attracting more labour.","correct":true,"explanation":"A higher wage increases the financial reward from each hour worked and raises the opportunity cost of leisure. More people therefore become willing to supply labour."},{"text":"Lower wages make work more rewarding, attracting more labour.","correct":false,"explanation":"This reverses the incentive created by wages. Higher wages, rather than lower wages, make paid work more financially rewarding and generally attract more labour."},{"text":"Higher wages make leisure more rewarding, attracting more labour.","correct":false,"explanation":"This confuses the reward from working with the income effect on leisure. The usual upward slope reflects higher wages making work more rewarding and attracting more labour."},{"text":"Higher wages make production more profitable, attracting more labour.","correct":false,"explanation":"This confuses labour supply with labour demand and ignores higher wage costs. Labour supply usually rises because higher wages make work more rewarding to workers."}]},{"id":"f2727a8d-d8cc-46b5-acca-88f72fc52212","cardType":"basic","points":1,"front":"What happens to labour supply if net migration increases available workers?","back":"Labour supply increases - the curve shifts right.","mcqOptions":[{"text":"Labour supply increases - the curve shifts right.","correct":true,"explanation":"Net migration enlarges the available workforce, so more labour can be supplied at each wage rate. This shifts the entire labour supply curve to the right."},{"text":"Labour supply decreases - the curve shifts left.","correct":false,"explanation":"This reverses the effect of a larger available workforce. Increased net migration normally adds potential workers, increasing labour supply and shifting its curve to the right."},{"text":"Labour demand increases - the curve shifts right.","correct":false,"explanation":"This confuses the number of available workers with firms’ demand for workers. The direct effect is an increase in labour supply, represented by a rightward supply shift."},{"text":"Labour supply increases - the curve shifts left.","correct":false,"explanation":"This attaches the wrong direction to an increase in supply. More labour supplied at every wage is shown by a rightward, not leftward, shift of the supply curve."}]},{"id":"5c18c2f8-ac6d-412c-90c8-a9e2fa90f5bc","cardType":"basic","points":2,"front":"If labour supply shifts right and demand slopes downwards, what happens to wage and employment?","back":"

Wage falls.
Employment rises.

","mcqOptions":[{"text":"

Wage falls.
Employment rises.

","correct":true,"explanation":"A rightward labour supply shift creates excess supply at the original wage. The equilibrium wage falls, while firms move along their demand curve and employ more labour."},{"text":"

Wage rises.
Employment rises.

","correct":false,"explanation":"This confuses increased labour supply with increased labour demand. More available workers reduce the equilibrium wage, although employment rises as firms hire more labour."},{"text":"

Wage falls.
Employment falls.

","correct":false,"explanation":"This overlooks movement along the downward-sloping labour demand curve. As the wage falls, firms demand more labour, so equilibrium employment rises rather than falls."},{"text":"

Wage rises.
Employment falls.

","correct":false,"explanation":"This is consistent with a leftward labour supply shift, not a rightward one. Increased labour supply lowers wages and raises equilibrium employment."}]},{"id":"268cf0d3-4b2e-4789-bfec-32835fddfb67","cardType":"basic","points":1,"front":"State the formula for wage elasticity of demand for labour.","back":"$E_{dL}=\\frac{\\text{percentage change in }Q_{dL}}{\\text{percentage change in }W}$","mcqOptions":[{"text":"$E_{dL}=\\frac{\\text{percentage change in }Q_{dL}}{\\text{percentage change in }W}$","correct":true,"explanation":"Wage elasticity of demand for labour measures the responsiveness of the quantity of labour demanded to a percentage change in the wage rate."},{"text":"$E_{dL}=\\frac{\\text{percentage change in }W}{\\text{percentage change in }Q_{dL}}$","correct":false,"explanation":"This inverts the elasticity formula by placing the causal wage change in the numerator. The percentage change in labour demanded must be divided by the percentage change in wages."},{"text":"$E_{dL}=\\frac{\\text{percentage change in }Q_{sL}}{\\text{percentage change in }W}$","correct":false,"explanation":"This calculates wage elasticity of labour supply because it uses quantity supplied. Wage elasticity of demand uses the percentage change in quantity of labour demanded."},{"text":"$E_{dL}=\\frac{\\text{change in }Q_{dL}}{\\text{change in }W}$","correct":false,"explanation":"This uses absolute changes and therefore calculates a slope rather than an elasticity. Elasticity compares percentage changes in labour demanded and the wage rate."}]},{"id":"dcd1c052-864f-48a7-ae34-9815a6b4f21a","cardType":"cloze","points":null,"front":"Labour demand is wage-inelastic when $|E_{dL}|$ is [ ]; wage-elastic when it is [ ].","back":"Labour demand is wage-inelastic when $|E_{dL}|$ is less than 1; wage-elastic when it is greater than 1.","mcqOptions":[{"text":"Labour demand is wage-inelastic when $|E_{dL}|$ is less than 1; wage-elastic when it is greater than 1.","correct":true,"explanation":"An absolute elasticity below 1 means labour demand changes proportionately less than wages. Above 1, labour demand changes proportionately more, making it wage-elastic."},{"text":"Labour demand is wage-inelastic when $|E_{dL}|$ is greater than 1; wage-elastic when it is less than 1.","correct":false,"explanation":"This reverses the elasticity classifications. Labour demand is wage-inelastic below 1 because quantity responds proportionately less, and wage-elastic above 1 because it responds proportionately more."},{"text":"Labour demand is wage-inelastic when $|E_{dL}|$ is equal to 1; wage-elastic when it is greater than 1.","correct":false,"explanation":"An absolute elasticity equal to 1 represents unit elasticity, not inelastic demand. Wage-inelastic demand has a value below 1, while wage-elastic demand has one above 1."},{"text":"Labour demand is wage-inelastic when $|E_{dL}|$ is less than 0; wage-elastic when it is greater than 0.","correct":false,"explanation":"Taking the absolute value means the elasticity cannot be negative, so zero is not the classification boundary. The relevant boundary is 1: below it is inelastic and above it is elastic."}]},{"id":"419c1c72-3eea-4639-b9cc-41f64a52efca","cardType":"basic","points":2,"front":"Why does easy replacement by machines make labour demand more elastic?","back":"Firms can substitute away from workers when wages rise.","mcqOptions":[{"text":"Firms can substitute away from workers when wages rise.","correct":true,"explanation":"When machinery is an accessible substitute, a wage increase gives firms a strong incentive to replace workers with capital. Labour demand therefore responds more sharply to wages."},{"text":"Firms must employ more workers when wages rise.","correct":false,"explanation":"This reverses firms’ normal response to higher labour costs. Easy access to machinery lets firms substitute away from workers, making labour demand more wage-elastic."},{"text":"Firms can raise prices without losing any sales.","correct":false,"explanation":"This concerns product pricing and assumes perfectly inelastic product demand. Machine replacement increases labour-demand elasticity because firms can substitute capital for workers when wages rise."},{"text":"Workers can substitute away from machines when wages rise.","correct":false,"explanation":"This assigns the substitution decision to workers and reverses its direction. Firms respond to higher wages by replacing labour with machinery where this is easy."}]},{"id":"8fd0e047-7af4-4a84-8845-571e02471531","cardType":"basic","points":2,"front":"Why does price-elastic final product demand make labour demand more elastic?","back":"Higher labour costs reduce sales sharply, so labour demand falls.","mcqOptions":[{"text":"Higher labour costs reduce sales sharply, so labour demand falls.","correct":true,"explanation":"When product demand is price-elastic, passing higher wage costs into prices causes a large fall in sales. Firms consequently cut output and reduce labour demand substantially."},{"text":"Higher labour costs reduce sales slightly, so labour demand is unchanged.","correct":false,"explanation":"This treats product demand as price-inelastic and disconnects output from labour requirements. Price-elastic product demand causes sales and derived labour demand to fall sharply after cost-driven price rises."},{"text":"Higher labour costs increase sales sharply, so labour demand rises.","correct":false,"explanation":"This reverses the usual relationship between price and quantity demanded. Higher labour costs can raise product prices, sharply reducing sales and therefore reducing derived demand for labour."},{"text":"Higher labour costs reduce wages sharply, so labour supply falls.","correct":false,"explanation":"This confuses firms’ derived demand for labour with workers’ labour supply. Price-elastic product demand means cost increases sharply reduce sales, output and labour demand."}]},{"id":"377fa835-eb4d-4644-9d26-14f0ae5cc7b8","cardType":"basic","points":1,"front":"State the formula for wage elasticity of supply of labour.","back":"$E_{sL}=\\frac{\\text{percentage change in }Q_{sL}}{\\text{percentage change in }W}$","mcqOptions":[{"text":"$E_{sL}=\\frac{\\text{percentage change in }Q_{sL}}{\\text{percentage change in }W}$","correct":true,"explanation":"Wage elasticity of supply measures the percentage change in quantity of labour supplied divided by the percentage change in the wage rate."},{"text":"$E_{sL}=\\frac{\\text{percentage change in }W}{\\text{percentage change in }Q_{sL}}$","correct":false,"explanation":"This reverses the elasticity formula, calculating the percentage change in wages divided by the percentage change in labour supplied. The correct formula puts quantity supplied in the numerator."},{"text":"$E_{sL}=\\frac{\\text{percentage change in }Q_{dL}}{\\text{percentage change in }W}$","correct":false,"explanation":"This uses quantity of labour demanded, which measures a demand response rather than supply elasticity. The correct formula uses the percentage change in quantity of labour supplied, $Q_{sL}$."},{"text":"$E_{sL}=\\frac{\\text{percentage change in }W}{\\text{percentage change in }Q_{dL}}$","correct":false,"explanation":"This both reverses the ratio and uses labour demanded instead of labour supplied. Wage elasticity of supply requires the percentage change in $Q_{sL}$ divided by the percentage change in $W$."}]},{"id":"e5bf42c5-648a-4c86-91ee-176b1e0a3b87","cardType":"cloze","points":null,"front":"Labour supply is usually [ ] because higher wages tend to encourage [ ].","back":"Labour supply is usually positive because higher wages tend to encourage more labour supplied.","mcqOptions":[{"text":"Labour supply is usually positive because higher wages tend to encourage more labour supplied.","correct":true,"explanation":"A positive relationship means that, other things being equal, higher wages encourage workers to offer more labour, so the labour supply curve usually slopes upwards."},{"text":"Labour supply is usually negative because higher wages tend to encourage more labour supplied.","correct":false,"explanation":"The relationship is normally positive, not negative, because higher wages generally encourage more labour supplied. A negative relationship would imply that higher wages reduce labour supply."},{"text":"Labour supply is usually positive because higher wages tend to encourage less labour supplied.","correct":false,"explanation":"This pairs a positive relationship with the opposite effect. If higher wages encourage less labour supplied, the relationship would be negative; the usual result is more labour supplied."},{"text":"Labour supply is usually elastic because higher wages tend to encourage more labour supplied.","correct":false,"explanation":"More labour supplied describes the direction of the relationship, which is usually positive. Elastic refers to the size of the percentage response, not whether the relationship is positive or negative."}]},{"id":"bbc472f7-80d4-4f1f-9b95-5d877a349c53","cardType":"basic","points":2,"front":"Why does quick, inexpensive training make labour supply more elastic?","back":"More workers can enter quickly when wages rise.","mcqOptions":[{"text":"More workers can enter quickly when wages rise.","correct":true,"explanation":"Quick, inexpensive training reduces barriers to entry, allowing unemployed workers or workers from other occupations to respond rapidly to higher wages."},{"text":"More workers can leave quickly when wages rise.","correct":false,"explanation":"Higher wages usually attract workers rather than encourage them to leave. Quick training makes labour supply more elastic because more workers can enter quickly when wages rise."},{"text":"More workers can enter slowly when wages rise.","correct":false,"explanation":"Slow entry would make labour supply less responsive over the relevant period. Inexpensive, quick training increases elasticity by allowing workers to enter quickly."},{"text":"Fewer workers can enter quickly when wages rise.","correct":false,"explanation":"Quick, inexpensive training increases the number of workers able to enter, rather than reducing it. This stronger response to wage changes makes labour supply more elastic."}]},{"id":"0a6957de-ec5b-4a31-a037-eaad06a7d501","cardType":"cloze","points":null,"front":"Elasticity measures [ ], not just a curve’s visual [ ].","back":"Elasticity measures percentage responsiveness, not just a curve’s visual slope.","mcqOptions":[{"text":"Elasticity measures percentage responsiveness, not just a curve’s visual slope.","correct":true,"explanation":"Elasticity compares percentage changes in one variable with percentage changes in another. A curve’s visual slope can be misleading because it depends on the scales used on the axes."},{"text":"Elasticity measures absolute responsiveness, not just a curve’s visual curvature.","correct":false,"explanation":"Elasticity measures percentage responsiveness, not absolute changes or curvature. It compares percentage changes between variables, while visual appearance alone cannot establish elasticity."},{"text":"Elasticity measures percentage responsiveness, not just a curve’s visual position.","correct":false,"explanation":"The relevant visual feature often confused with elasticity is slope, not position. Elasticity measures percentage responsiveness, so the correct second term is slope."},{"text":"Elasticity measures marginal responsiveness, not just a curve’s visual slope.","correct":false,"explanation":"Elasticity is based on percentage responsiveness rather than marginal responsiveness. Although slope may be considered visually, it is not sufficient to measure elasticity accurately."}]},{"id":"8f814fb2-8d85-46f4-a32e-00d05a757504","cardType":"cloze","points":null,"front":"A wage differential is a difference in [ ] between different [ ].","back":"A wage differential is a difference in wage rates between different workers or labour markets.","mcqOptions":[{"text":"A wage differential is a difference in wage rates between different workers or labour markets.","correct":true,"explanation":"A wage differential compares wage rates across workers or labour markets. Differences may reflect skills, working conditions, discrimination, geographical factors, or other labour-market influences."},{"text":"A wage differential is a difference in employment levels between different workers or labour markets.","correct":false,"explanation":"This describes differences in employment, not wages. A wage differential specifically means a difference in wage rates between different workers or labour markets."},{"text":"A wage differential is a difference in wage rates between different firms.","correct":false,"explanation":"Wage differences between firms can occur, but the definition is broader and refers to different workers or labour markets. Limiting it only to firms makes the definition incomplete."},{"text":"A wage differential is a difference in wage rates between different products or markets.","correct":false,"explanation":"Products do not receive wages, so this confuses labour-market comparisons with product-market comparisons. Wage differentials concern wage rates between workers or labour markets."}]},{"id":"749d6184-f0d4-45ed-95e9-a28a4dc5fc18","cardType":"basic","points":2,"front":"How can higher human capital raise wages?","back":"Higher skills increase productivity, raising firms’ demand for labour.","mcqOptions":[{"text":"Higher skills increase productivity, raising firms’ demand for labour.","correct":true,"explanation":"Human capital improves workers’ skills and productivity. Since each worker can produce more output, the marginal revenue product of labour rises, increasing firms’ demand for labour and wages."},{"text":"Higher skills increase productivity, lowering firms’ demand for labour.","correct":false,"explanation":"This reverses the demand effect. Greater productivity raises the value of a worker’s output, so firms usually demand more labour rather than less, putting upward pressure on wages."},{"text":"Higher skills reduce productivity, raising firms’ demand for labour.","correct":false,"explanation":"The misconception is that training raises labour costs but ignores its productive benefit. Higher human capital normally increases productivity, which raises rather than lowers firms’ demand for labour."},{"text":"Higher skills increase labour supply, raising firms’ demand for labour.","correct":false,"explanation":"Human capital can affect labour supply, but the direct explanation is that higher skills increase productivity. Greater productivity raises the marginal revenue product of labour and firms’ demand."}]},{"id":"04823883-f290-4835-95d3-664573cc29fd","cardType":"basic","points":1,"front":"Why might dangerous or stressful jobs pay more?","back":"They may require a compensating wage differential.","mcqOptions":[{"text":"They may require a compensating wage differential.","correct":true,"explanation":"A compensating wage differential is extra pay offered to compensate workers for undesirable job characteristics such as danger, stress, unpleasant conditions, or inconvenient hours."},{"text":"They may require a reservation wage.","correct":false,"explanation":"A reservation wage is the minimum wage a worker is willing to accept, not the extra pay compensating for unpleasant job conditions. The relevant concept is a compensating wage differential."},{"text":"They may require a minimum wage.","correct":false,"explanation":"A minimum wage is a legal wage floor applying to workers, not compensation specifically linked to dangerous or stressful conditions. Such jobs may instead offer a compensating wage differential."},{"text":"They may require a negative wage differential.","correct":false,"explanation":"Dangerous or stressful conditions generally make jobs less attractive, so employers may need to offer additional pay. This is a positive compensating wage differential, not a negative one."}]},{"id":"3861ffd3-1b4d-48a6-8e9a-4c1152e21414","cardType":"basic","points":2,"front":"How can discrimination create wage gaps?","back":"Unequal treatment lowers pay for some groups despite similar productivity.","mcqOptions":[{"text":"Unequal treatment lowers pay for some groups despite similar productivity.","correct":true,"explanation":"Discrimination can cause employers to pay some groups less even when their productivity is similar to that of better-paid workers, creating a wage gap unrelated to productive contribution."},{"text":"Equal treatment lowers pay for some groups despite similar productivity.","correct":false,"explanation":"Equal treatment would not create a discriminatory wage gap between similarly productive groups. The relevant mechanism is unequal treatment that lowers pay for some groups."},{"text":"Unequal treatment raises pay for some groups despite similar productivity.","correct":false,"explanation":"This reverses the direction usually highlighted in the explanation. Discrimination can lower pay for some groups despite similar productivity, producing an unjustified wage gap."},{"text":"Differences in productivity lower pay for some groups despite similar productivity.","correct":false,"explanation":"The statement contradicts itself and changes the cause from discrimination to productivity differences. Discriminatory wage gaps occur when unequal treatment affects similarly productive groups."}]},{"id":"f9bbcf61-e2c6-4b2e-8134-33c67694a87c","cardType":"basic","points":1,"front":"Give one positive effect of wage differentials.","back":"They create incentives to gain skills or enter shortage occupations.","mcqOptions":[{"text":"They create incentives to gain skills or enter shortage occupations.","correct":true,"explanation":"Higher wages in skilled or shortage occupations can attract workers towards training and these jobs, helping labour move towards areas where demand is greater than supply."},{"text":"They create incentives to work fewer hours or avoid training.","correct":false,"explanation":"Wage differentials generally reward skills and shortage occupations, so they encourage training or movement into those jobs rather than making workers avoid them. The correct effect is that they create incentives to gain skills or enter shortage occupations."},{"text":"They eliminate incentives to gain skills or enter shortage occupations.","correct":false,"explanation":"The prospect of earning more usually strengthens incentives to acquire skills or enter occupations with labour shortages. The correct positive effect is that wage differentials create incentives to gain skills or enter shortage occupations."},{"text":"They ensure all workers receive equal wages regardless of skills or labour shortages.","correct":false,"explanation":"Wage differentials mean pay varies between workers or occupations; they do not create equal wages. Their positive effect is encouraging workers to gain skills or enter shortage occupations."}]},{"id":"9475560e-535f-49ae-a1e1-60874e3348f2","cardType":"basic","points":1,"front":"Give one problem caused by large wage gaps.","back":"They can increase income inequality and relative poverty.","mcqOptions":[{"text":"They can increase income inequality and relative poverty.","correct":true,"explanation":"Large wage gaps mean some workers earn substantially more than others, widening the income distribution and potentially increasing the proportion of people living on relatively low incomes."},{"text":"They can reduce income inequality and relative poverty.","correct":false,"explanation":"A wider gap between high and low wages generally increases inequality and can worsen relative poverty, rather than reducing it. The correct problem is increased income inequality and relative poverty."},{"text":"They can increase employment and labour market participation.","correct":false,"explanation":"These may be possible effects of incentives, but they are not the standard problem associated with large wage gaps. The relevant problem is increased income inequality and relative poverty."},{"text":"They can guarantee equal living standards across different households.","correct":false,"explanation":"Unequal wages are likely to produce differences in household incomes and living standards, not guarantee equality. The correct problem caused by large wage gaps is increased income inequality and relative poverty."}]}]}],"examCountdown":{"examDate":"2027-05-10","paperLabel":"Component 1"},"heading":"Wage determination","title":"Wage determination Flashcards","topbar":{"backHref":"/a-level/economics/eduqas/flashcards"},"topicSidebar":"$L38"}]}],"topicId":"dcf23061-a066-5f87-aaf9-de56229db66c","walled":"$L39"}],"$L3a","$L3b"]