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Economics IGCSEPDF 60
118 pagesrevision 46932
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Definitions
Labour: Human effort, both physical and
mental, used in the production of goods and
services.
Demand for Labour: The number of
workers that firms are willing and able to
hire at a given wage rate. It is a derived
demand, meaning it depends on the
demand for the final good or service the
labour produces.
Supply of Labour: The number of workers
willing and able to work at a given wage
rate.
Wage Rate: The price of labour, typically
expressed as pay per hour, day, or year.
Wage Factor: The financial compensation
from work, such as basic pay, overtime pay,
bonuses, and commission.
Non-Wage Factor: The non-financial
rewards from work, such as job satisfaction,
job security, working conditions, holidays,
training opportunities, and fringe benefits
(e.g., company car).
Net Advantages: The sum of all wage and
non-wage factors for a job. Workers will
choose the job with the highest net
advantages.
Geographical Mobility: The ease with
which workers can move between different
areas or countries to find work.
Occupational Mobility: The ease with
which workers can change between
different occupations or jobs, usually
determined by skills and training.
Demand and Supply of Labour
Supply of Labour (SL)
Demand for Labour (DL)
Relationship with Wage:
●
Inversely
related. As thewage rate falls,the
quantity of labour demanded rises
because it is cheaper to hire more
workers.
● Shifts in the Demand Curve:
○ Increase in Demand for the
Final Product: If consumers
buy more of the product,
firms need more labour to
produce
it.
DL
increases
(shifts right). Increase in
Labour
Productivity:
If
workers
become
more
efficient
(produce
more
output per hour), firms may
demand
more
of
that
productive
labour.
DL
increases
(shifts
right).
Change in Price of Capital:
If
machinery
(capital)
becomes more expensive,
firms may substitute it with
relatively cheaper labour. DL
increases (shifts right).
○
○
Specialisation is when an individual, firm,
or country concentrates on producing a
limited range of goods or services they are
best at.
The Division of Labour is a form of
specialisation where the production process
of a good is broken down into a sequence of
separate, specific tasks, and each worker is
assigned one of these tasks