Questions Microeconomics (with answers)
             7 Labour market
              01 Demand for labour
                   The demand for labour is a derived demand. Explain.
              02 The labour market and the market for goods
                   Which effects has a rise in wages on the equilibria in the markets for goods.
                                   Case 1:                                         Case 2: 
                              Competition in the                               Monopoly in the  
                               market for goods                               market for goods 
                          $                                               $ 
                                             MC                                             MC 
                                                  D 
                                                                                           D 
                                                   Q                                               Q 
                                                       MC = Marginal cost 
                                                       D = Demand 
                                                       Q = Quantity 
              03 Demand for labour by an individual firm
                   (Short run: capital fixed)
                                    Wage /          Demand 
                                    Demand 
                                       Wage* 
                                                                        Labour services 
                   À Which forces determine demand?
                   À What happens to demand for labour if the produced goods become fashionable?
             QMICR7.DOC                    Page 1 (of 3)   7 Labour market                    7th July 2010
              04 The supply of labour by an individual worker
                                       Wage                Supply 
                                                                        Labour services 
                   Explain the backward bending supply curve.
              05 Minimum wage 1
                                       Wage                 Supply 
                                                            Demand 
                                                                        Labour services 
                   Which effects has a minimum wage?
              06 Minimum wage 2 (Employer is a monopsist.)
                                                            Marginal 
                                       Wage                 factor cost 
                                                            (Labour) 
                                                                  Supply 
                                                             Demand 
                                                                        Labour services 
                   Illustrate why in this case a minimum wage can even raise labour demand.
             QMICR7.DOC                    Page 2 (of 3)   7 Labour market                    7th July 2010
            07 Work or leisure time?
                                     Case 1:                             Case 2: 
                                Low (work) income                   High (work) income 
                        Income                               Income 
                                                                       IC 1 
                                  IC 1 
                                                                                           IC 2 
                                                  b 
                                                      IC 2 
                                                  a 
                                               24 hours                            24 hours 
                                      Work                                 Work 
                                    Leisure time                        Leisure time 
                                                 IC = Indifference curve 
                                                 a + b = non-work income 
                                                 b = fixe cost if working 
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           QMICR7.DOC                  Page 3 (of 3)   7 Labour market               7th July 2010