| What are Wage Differentials? | -These are Differences in Wages between Different Groups of Workers, or Between Workers in the same Job |
| Why can Wage Differentials exist? | -Highly Skilled workers are usually Paid More due to more Skills or experience. Also known as High Human Capital
-Wages will vary by the Region and between Industries
-Trade Unions could Influence the Wage Rate to a Paid Group of Workers |
| Why are the Wages for Lawyers high? | -Demand for Lawyers are High, as they offer a High MRP. They can makes Lots of Revenue for the Firm
-Demand is Inelastic too, because Lawyers are not Easily Replaced. Machines aren't pulling up anytime soon
-Supply will be Low too, as in the Short Run especially, because of the Time and Money needed to become a Lawyer |
| Why are the Wages for Office Cleaners low? | -Demand for Cleaners is Relatively Lower than the Supply of Cleaners, The MRP for Cleaners is not very High, meaning Demand is low as Cleaners will not Earn a Lot of Revenue
-Supply will be High and Elastic, due to no Qualifications needed. Many People can do the Job |
| What happens in a Perfectly Competitive Labour Market? | -Here, Firms become Wage (Price) Takers. The Market Wage is the Marginal Cost of Hiring for the Firm
-Individual Firms have no Power to Influence the Wage Level, so they must accept the Market Wage Rate
-This means the Market Wage Rate is the Firm's Labour Supply Curve. Because the Marginal Cost is Constant (As its Perfectly Elastic) Average Cost is also a Line
-A Firm, who wishes to Max out Profits, will hire at the Point where MC = MRP |
| What is a Monopsony? | -This refers to only 1 Buyer in a Market. In a Monopsony Labour Market, there is only one Single Employer. Quite Depressing |
| What occurs in a Monopsony Labour Market? | -Because only 1 Employer exists, the Monopsonies Employer can pay a Wage that is Less than the Worker's MRP and Less than what a Perfectly Competitive Labour Market would pay
-The MC Curve is above the AC Curve so Hiring one more Employee would be more Expensive overall. The AC Curve represents the Labour Supply Curve. Firms will hire a Number of Workers where MRP = MC and Hire at the Wage Rate where its equal to the AC. |
