Key term
OCR A-Level Economics H460
Introduction to Microeconomics
Topic overviewEconomic and free goods, scarcity and positive and normative statementsEconomic agents and the factors of productionFactor rewards, rationality and the objectives of economic agentsIncentives and the functions of the price mechanismMarket, planned and mixed economies and allocative and productive efficiencyOpportunity cost, trade-offs and the production possibility curveShifts of the production possibility curve and uses of opportunity cost
Microeconomics: The Role of Markets
Topic overviewSpecialisation, the division of labour and barterMoney as a medium of exchange and the gains from specialisationIndividual and market demand and joint, competitive and composite demandMovements along and shifts of the demand curveIndividual and market supply and joint and competitive supplyMovements along and shifts of the supply curveConsumer surplus and producer surplusHow changes in price affect consumer and producer surplusCeteris paribus and market equilibrium and disequilibriumChanges in demand and supply and their effects on related marketsPrice and income elasticity of demand and total revenueCross elasticity, price elasticity of supply and the uses of elasticityMarginal utility, marginal cost and decisions at the marginMarket failure and marginal social cost and benefitPositive and negative production and consumption externalitiesInformation failure, asymmetric information and merit and demerit goodsMerit and demerit good diagrams and correcting information failurePublic, private and quasi-public goodsThe free rider problem and the provision of public goodsIndirect taxes and subsidies to correct market failureState provision, price controls, buffer stocks and legislationRegulation, tradable pollution permits and government failure
Microeconomics: Business Objectives
Topic overviewProfit maximisation and alternative business objectivesCorporate social responsibility and the principal-agent problemFixed, variable, average and marginal costsDiminishing returns and economies and diseconomies of scaleTotal, average and marginal revenueProfit, loss and normal and supernormal profit
Microeconomics: Market Structures
Topic overviewPerfect competition in the short and long run and allocative efficiencyProductive efficiency and perfect competition as a benchmarkMonopoly characteristics, equilibrium and static efficiencyDynamic efficiency, price discrimination and natural monopolyCharacteristics of monopolistic competition and its short run equilibriumLong run equilibrium and efficiency in monopolistic competitionCharacteristics of oligopoly, concentration ratios and the kinked demand curveNon-price competition, collusion and the pros and cons of oligopolyCharacteristics of contestable markets, sunk costs and hit-and-run entryEfficiency, barriers and the limits of contestable markets
Microeconomics: The Labour Market
Topic overviewDerived demand for labour and wage elasticity of demandLabour productivity, unit labour costs and marginal revenue productSupply of labour and wage elasticity of supplyShort and long run labour supply, transfer earnings and economic rentWage differentials, labour mobility and monopsonyTrade unions, bilateral monopoly and the effects of monopsonyWage determination in a competitive labour market and labour market flexibility
Macroeconomics: Aggregate Demand and Aggregate Supply
Topic overviewThe circular flow of income, injections and leakagesMethods of measuring national incomeComponents of aggregate demand and their determinantsThe slope of the aggregate demand curve and what shifts itConsumption, income and the role of expectationsShort run and long run aggregate supply curvesShifts in short run and long run aggregate supplyMacroeconomic equilibrium and the effects of demand and supply shiftsThe national income multiplier and marginal propensitiesThe accelerator, the economic cycle and output gaps
Macroeconomics: Economic Policy Objectives
Topic overviewEconomic growth, real and nominal GDP and GDP per capitaShort and long run growth, the economic cycle and the effects of growthEconomic structure, deindustrialisation and sustainable developmentLimitations of GDP and the Human Development IndexEmployment, unemployment rates and the objective of full employmentMeasures, types and costs of unemployment and the effects of full employmentInflation, deflation, real values and the CPI and RPICalculating inflation with index numbers and its causes and consequencesBalance of payments accounts and current account calculationsCauses and consequences of current account imbalancesKey trends in UK macroeconomic performanceComparing UK performance internationally and the limits of economic dataIncome and wealth, redistribution and absolute and relative povertyLorenz curves, the Gini coefficient and the causes of povertyThe natural rate of unemployment and Keynesian and neo-classical aggregate supplyShort and long run Phillips Curves and their usefulness
Macroeconomics: Implementing Policy
Topic overviewThe government budget, types of tax and the budget balanceNational debt, cyclical and structural deficits and crowding outThe Laffer curve, average and marginal tax rates and limits of fiscal policyInterest rates, the money supply and inflation targetsQuantitative easing, the exchange rate and limits of monetary policyPrivatisation, deregulation and subsidies as supply side policiesCompetition policy, infrastructure, education and tax and benefit reformLabour market flexibility, immigration control and limits of supply side policyConflicts between macroeconomic policy objectives
Macroeconomics: The Global Context
Topic overviewPatterns of international trade and global supply chainsAdvantages and disadvantages of international tradeExchange rate calculations and how exchange rates are determinedExchange rate changes, the Marshall-Lerner condition and exchange rate systemsGlobalisation, international competitiveness and comparative advantageTerms of trade and the impact of globalisation and emerging economiesProtectionism and the effects of a tariffQuotas, trade creation, economic integration and the World Trade Organisation
Macroeconomics: The Financial Sector
Topic overviewFunctions of money, credit creation and narrow and broad moneyThe quantity theory of money and interest rates in the money marketRoles of the financial sector, saving and investmentThe Harrod-Domar model and microfinanceFinancial regulation and the functions of a central bankMonetary policy effectiveness, limits of regulation and the IMF
Quantitative Skills for Economics
Themes in Economics: Synoptic Application
Microeconomics: The Labour Market
- 7 subtopics
- 21 things to know
- Component 01
What Microeconomics: The Labour Market covers
The Labour Market is examined on component 01 of OCR Economics, Microeconomics. 83 recall questions across 7 subtopics.
Where it is assessed
Component 01
Microeconomics, the whole of the first paper.
Check the OCR specification ↗The 7 subtopics
Each one has its own page.
- Derived demand for labour and wage elasticity of demandRecall questions on labour as a derived demand, factors that shift labour demand, wage elasticity of demand for labour, its determinants, and calculating it.Open →
- Labour productivity, unit labour costs and marginal revenue productRecall questions on labour productivity and unit labour cost calculations, competitiveness, and marginal revenue product theory as the firm's demand curve for labour with its limitations.Open →
- Supply of labour and wage elasticity of supplyRecall questions on influences on the supply of labour, net advantages, the individual's hours decision, and calculating and explaining wage elasticity of supply.Open →
- Short and long run labour supply, transfer earnings and economic rentRecall questions on short and long run labour supply, transfer earnings and economic rent with calculations and diagrams, and why elite footballers earn large economic rent.Open →
- Wage differentials, labour mobility and monopsonyRecall questions on wage differentials and compensating differentials, imperfect information, geographical and occupational mobility of labour, and how monopsony sets wages and employment.Open →
- Trade unions, bilateral monopoly and the effects of monopsonyRecall questions on the monopsonist's supply curve, how trade unions raise wages and affect jobs and efficiency, bilateral monopoly, and the consequences of monopsony employers.Open →
- Wage determination in a competitive labour market and labour market flexibilityRecall questions on the competitive labour market diagram and equilibrium wage, shifts in demand for and supply of labour, and the benefits and costs of labour market flexibility.Open →
What you need to know
Answer each one before you reveal it.
Your recallNot started
Evaluation
Explain how a monopsonist wage and employment level compare with those in a competitive labour market.
Key term
Explain why market demand for labour slopes downwards and market supply slopes upwards.
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How is the equilibrium wage determined on the competitive labour market diagram, and what happens if the wage is above it?
Evaluation
Give two arguments that greater labour market flexibility benefits an economy.
Key term
Why can a substantial pay rise leave unit labour costs completely unchanged?
Numbers
A worker adds 12 units of output a day and each unit sells for £15 in a competitive market. Calculate the worker's marginal revenue product.
Process
Distinguish between geographical and occupational mobility of labour.
Process
A large inflow of trained workers arrives in an occupation. Which curve shifts, in which direction, and what happens to the wage and employment?
Key term
What does it mean to say that the demand for labour is a derived demand?
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Name three factors, other than the wage rate, that shift the demand curve for labour in an industry.
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Why does the supply of labour to an industry normally rise as the wage rate rises?
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Name four influences on the supply of labour to an industry other than the wage rate.
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Why is the supply of labour to supermarket shelf-stacking highly wage-elastic?
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Why does a rise in labour productivity raise the demand for labour at a given wage?
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Define labour productivity.
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An occupation removes a costly licensing requirement for new entrants. What happens to the supply of labour to it?
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A shortage of qualified electricians pushes their pay sharply upwards. Why does the high pay persist for several years?
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Define a wage differential.
Process
Why does a monopsonist face an upward-sloping supply curve of labour when a small competitive firm does not?
Key term
Give two costs of greater labour market flexibility.
Take Microeconomics: The Labour Market further
The same content, four other ways.
Commonly confused
Pairs that lose marks when they are blurred together.
Transfer earnings vs Economic rent
Transfer earnings: the minimum a factor must be paid to keep it in its present use. Economic rent: any payment to a factor above the minimum needed to keep it where it is.
Monopsony vs Bilateral monopoly
Monopsony: a market with a single buyer, able to set the price it pays. Bilateral monopoly: a market with a single buyer facing a single seller, so the outcome is bargained.
Labour productivity vs Unit labour cost
Labour productivity: output produced per worker or per hour worked. Unit labour cost: the wage cost of producing one unit of output.
Questions from this topic
Each one with the model answer underneath.
- 1
What does it mean to say that the demand for labour is a derived demand?
Model answer
Firms want workers not for their own sake but for the output they produce, so the demand for labour derives from the demand for the good or service being made.
- 2
Falling consumer demand for new cars leads car assembly plants to lay off staff. Which property of labour demand does this show?
Model answer
It shows that labour demand is derived: weaker demand for the final product feeds straight through into fewer workers being wanted.
- 3
Name three factors, other than the wage rate, that shift the demand curve for labour in an industry.
Model answer
Demand for the industry's final product, the productivity of its workers, and the price of capital equipment that could replace them.
- 4
Why does a rise in labour productivity raise the demand for labour at a given wage?
Model answer
Each worker now adds more output and so more revenue, which raises marginal revenue product and makes it profitable to employ more workers at the same wage.
- 5
How does a fall in the price of machinery capable of doing the same job affect the demand for labour?
Model answer
It encourages firms to substitute capital for labour, so the labour demand curve shifts to the left at every wage.
- 6
Define wage elasticity of demand for labour.
Model answer
It is the responsiveness of the quantity of labour demanded to a change in the wage rate, measured as the percentage change in labour demanded divided by the percentage change in the wage.
What is inside Levo
Six ways to work the same material.
Microeconomics: The Labour Market revision questions
- What does Microeconomics: The Labour Market cover in OCR A-Level Economics?
- 7 subtopics: derived demand for labour and wage elasticity of demand, labour productivity, unit labour costs and marginal revenue product, supply of labour and wage elasticity of supply, short and long run labour supply, transfer earnings and economic rent, wage differentials, labour mobility and monopsony, trade unions, bilateral monopoly and the effects of monopsony and wage determination in a competitive labour market and labour market flexibility. Each one has its own page with questions and model answers.
- How is Microeconomics: The Labour Market organised?
- By the OCR H460 specification, subtopic by subtopic, so it matches the order you are taught it in.
Every question in Microeconomics: The Labour Market, on a schedule.
Attempt a question from memory, write the correct version, then attempt it again. Levo records the jump between your first attempt and your last, and brings each question back on the day you are due to forget it.
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