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1. Individuals, firms, markets and market failure
1.6 The labour market
1.6.3 The determination of relative wage rates and levels of employment in competitive and non-competitive markets
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What are relative wage rates?
Wages compared across occupations
What is a non-competitive labour market?
Few buyers or sellers
Equilibrium wage rates in competitive markets are determined by the intersection of demand and
supply
Non-competitive labour market structures include monopolies and oligopolies.
True
What is compared in competitive and non-competitive labour markets?
Wage rates and employment levels
Government regulations can influence wages and employment in the labour
market
A higher demand for workers in a specific occupation leads to higher relative wage
rates
In a competitive labour market, wages are determined by the interaction of supply and
demand
.
True
What is the key difference in wage determination between competitive and non-competitive labour markets?
Market power vs. supply and demand
Relative wage rates are influenced by the interaction of supply and
demand
In a non-competitive labour market, wages are influenced by market
power
Relative wage rates are determined by the interaction of
supply and demand
for labour.
True
What do relative wage rates define in the labour market?
Wages of different occupations compared
Match the wage rate type with its definition:
Relative Wage Rates ↔️ Wages of different occupations compared
Absolute Wage Rates ↔️ Actual monetary amounts paid
In a non-competitive labour market, there are many buyers and sellers.
False
In a non-competitive labour market, wages are influenced by the market power of either employers or
workers
Match the labour market type with its example:
Competitive ↔️ Retail, fast food, entry-level jobs
Non-Competitive ↔️ Unionized industries, specialized professions
What are the determinants of the supply of labour in a competitive market?
Wage rates, job satisfaction
The equilibrium wage is the wage rate at which the quantity of labour demanded equals the quantity of labour
supplied
In a competitive labour market, employment levels are influenced by both supply and
demand
.
True
Match the labour market factor with its impact on employment:
Increased Productivity ↔️ Higher employment
Increased Supply ↔️ Lower wage rates
What do relative wage rates help analyze in the labour market?
Wage differentials
A competitive labour market is one where there are many buyers (employers) and many sellers (workers) of
labour
What is the primary difference between a competitive and a non-competitive labour market?
Market power
In a non-competitive labour market, wages are influenced by market power rather than solely by
supply and demand
.
True
Equilibrium wage rates in competitive markets are determined by the interaction of labour supply and
demand
What is the primary effect of a monopoly in the labour market on wages?
Lower wages
An oligopoly in the labour market may lead to
wage stagnation
or lower wage growth for workers.
True
How many employers are in a competitive labour market?
Many
Competitive labour markets have higher employment levels compared to
monopolies
True
What type of wage disparity exists in a competitive labour market?
Minimal
A monopoly employer can exploit market power to set wages below competitive levels
True
Match the labor market structure with its key characteristic:
Monopoly ↔️ Single employer
Oligopoly ↔️ Few dominant employers
Competitive ↔️ Many employers and workers
Non-competitive labor markets result in greater wage
disparities
compared to competitive markets
True
Relative wage rates compare wages across different
occupations
Match the wage rate type with its definition:
Relative wage rate ↔️ Wages of different occupations compared
Absolute wage rate ↔️ Actual monetary amounts paid
In a competitive labor market, wages reflect
worker skills
and education
True
Unions in non-competitive labor markets can negotiate wages not fully dictated by
market forces
True
Match the wage determination method with the labor market type:
Influenced by market power ↔️ Non-Competitive
Determined by supply and demand ↔️ Competitive
The labor demand curve slopes downward due to
diminishing returns
True
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