With the help of a diagram, assess whether the impact of an increase in labour productivity on the wages and employment of a firm is likely to be greater in a perfectly competitive labour market than in an imperfectly competitive labour market.

Economics

IGCSE&ALevel

CAIE

Exam No：9708_s25_qp_42 Year：2025 Question No：3

Answer:

Knowledge points:

7.5.2.1 definition and calculation of fixed costs (FC) and variable costs (VC)

7.5.2.2 definition and calculation of total, average and marginal costs (TC, AC, MC), including average total cost (ATC), total and average fixed costs (TFC, AFC) and total and average variable costs (TVC, AVC)

7.5.2.3 explanation of shape of short-run average cost and marginal cost curves

7.5.4.1 explanation of shape of long-run average cost curve

7.5.4.2 concept of minimum efficient scale

8.3.1 demand for labour as a derived demand

8.3.2 factors affecting demand for labour in a firm or an occupation

8.3.7.1 equilibrium wage rate and employment in a labour market

8.3.8.1 influence of trade unions on wage determination and employment in a labour market

8.3.8.2 influence of government on wage determination and employment in a labour market using a national minimum wage

8.3.8.3 influence of monopsony employers on wage determination and employment in a labour market

With the help of a diagram, assess whether the impact of an increase in labour productivity on the wages and employment of a firm is likely to be greater in a perfectly competitive labour market than in an imperfectly competitive labour market.

Answer:

Knowledge points:

Solution:

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