Sample by My Essay Writer
1. Explain two important differences between the labour market and the product market.
One of the most important ways the labour and product markets differ is through the function of supply and demand, which sets the quantity and price. If there is a high price in the product market, there is a long-term tendency for additional goods to be produced until the market’s demand is satisfied. In the labour market the supply can’t be manufactured do to the fact that there is a limited amount of time in the day; people are not manufactured.
Also, labour markets are considered to be non-clearing markets. While, product markets have an equilibrium point without having an excess of surplus or demand, labour markets are expected to maintain a consistent level of unemployment.
2. Explain why the value of the marginal product curve for labour is also the demand for labour curve in a perfectly competitive labour market.
The marginal product curve for labour is the demand for labour curve in a perfectly competitive market because a company that is in a perfectly competitive market will hire workers until the value of the marginal product of labour equals the wage. This is because the price is already set in a perfectly competitive market, so the company is more able to accurately determine the optimum point of labour output to create the most value for the product that is being created.
3. Explain two factors which shift the demand for labour and two factors which shift the supply of labour.
The output price can shift the demand for labour. Due to the fact that the marginal product is the marginal product times the price of the firm’s output, the output price changes the value of the marginal product, and this causes the labour demand curve to shift.
Also, a technological change can shift the demand for labour. When there is an improvement in technology, this can often result in there needing to be fewer people to perform the same task, and that means fewer workers and needed, and this shifts the demand for labour.
The supply of labour shifts with changes in attitudes. For example, the women’s rights movement resulted in many more women entering the workforce in 2000 than did so in 1950.
Changes in alternative opportunities also affect the supply of labour. This is because the supply of labour depends on the opportunities that are available on other labour markets. If there are more job opportunities in another industry, then the availability of workers will diminish in a separate industry, or in multiple industries.
4. Provide four reasons why some workers receive higher wages than other workers.
Highly productive workers are highly paid and workers who are less productive are not paid well.
Psychical capital is also a determinant of wage because when workers are working with a larger quantity of structures and equipment, they are able to produce more.
Human capital is also an important determinant because more educated workers are able to produce more.
The technological knowledge is also vital because workers who are able to access more sophisticated technology, they can product more.
5. How do we measure income inequality? What are two general ways of reducing income inequality in a Mixed Economy like Canada?
Income inequality can be measured in several ways. One way is to line up the incomes of all of the families in the economy according to their annual family income. Next, divide the families into five equal groups. You can then determine the disparity in incomes, and find the average income. If one income class rises high above the average and the lower income class falls way below the average, there is a high income inequality.
Redistributing the income is the best way to fight against income inequality. This can be done through income tax and transfer programs.