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Labour Market Economics Exam Questions and Correct Answers Latest Update (Graded A+) £6.76
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Exam (elaborations)

Labour Market Economics Exam Questions and Correct Answers Latest Update (Graded A+)

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  • Module
  • Labour Mar-ket Economics
  • Institution
  • Labour Mar-ket Economics

Labour Market Economics Exam Questions and Correct Answers Latest Update (Graded A+) Three major participants that impact our experience with labour market issues - Answers 1. individual workers 2. employers 3. the govt Economics - Answers Allocation of scarce resources Two major decisions tha...

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  • November 15, 2024
  • 15
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • Labour Mar-ket Economics
  • Labour Mar-ket Economics
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Labour Market Economics Exam Questions and Correct Answers Latest Update (Graded A+)

Three major participants that impact our experience with labour market issues - Answers 1. individual
workers

2. employers

3. the govt

Economics - Answers Allocation of scarce resources

Two major decisions that people have to make - Answers 1. whether or not to work

2. if so, how many hours

Labour force - Answers people in the eligible population who participate in the labour market activities

Eligible population - Answers -proportion of the population that are potential labour force participants

-that is: civilian, non institutionalized, 15 years or older and not including those resident in Nunavut,
Yukon, or NWT or in FN reserves

Labour force formula - Answers LF = employed (E) + unemployed seeking work (U)

Labour force participation rate - Answers fraction of the population that participates



LFPR = LF / eligible population

Unemployment rate - Answers fraction of the labour force that is unemployed



UR = U / LF OR

U/U + E

Indifference curve - Answers -defined as a line joining all points that represents combinations of
consumption and leisure that yield the same satisfaction

-mapping of a persons preference structure

-people are presumed to want more than less (assumption)

Indifferent - Answers both choices/ options make you equally satisfied

Leisure - Answers all non labour market activities

Marginal rate of substitution (MRS) - Answers slope of the indifference curve

, Yn - Answers non labour market income

W - Answers wage

T - Answers max amount of leisure possible if no labour market activity is undertaken

Income and substitution effect of wage change - Answers -increasing wage rates don't always mean
increased work effort

-wage increase often encouraged people to work extra hours but that extra income had the effect of
encouraging more leisure (income effect)

-person will substitute towards the cheaper good (substitution effect)

Net effect - Answers which effect (income or substitution) is greater - more work or more leisure

Why should one effect be greater than the other and how is this shown - Answers -depends on the
preference structure of the person

-when the curves favour one axes over the other, you assume that the preferences are in that direction

Reservation wage - Answers wage at which the person is indifferent between working or not working

En - Answers equilibrium of a non participant

Why would the labour supply curve bend backwards against itself - Answers when the income effect is
overcoming the substitution effect

How did the social security safety net start - Answers govt focused on policies designed to boost
consumption spending in order to compensate for the decline in govt spending on the war

Examples of social security safety nets - Answers 1. canadian pension plan / Quebec pension plan (CPP)

2. workers comp

3. child tax benefits

4. EI

5. old age security (OAS)

Goal of social security safety nets - Answers to assist those who have low income or no income and how
to design them to maximize the benefits to the people who they are supposed to assist while having the
least work disincentive efforts

Demogrant - Answers lump transfer to some designated group of people (ex. all people over 65,
everyone gets it regardless of wealth)

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