Edexcel A Level Microeconomics Exam 2024 Questions With Complete solutions(rated A)

Edexcel A Level Microeconomics Exam 2024 Questions With Complete solutions(rated A) Factors influencing demand for labour - ANSWERSDemand for final product - if rise in output increase in productivity Relative productivity of labour to capital - substitution effect £3,000 subsidy for hiring unemployed 18-24 y.o. = half UK's youth minimum wage Factors influencing supply of labour - ANSWERSCost of living Cost of gaining skills UK uni fees capped at £9,250 per year Number of workers UK raises state pension age from 67 to 68 Market failures in labour markets - ANSWERSGeographical immobility - inability of labour to move from one location to another Occupational immobility - inability of labour to move form one industry to another Employer monopsony - wage-setting power - wage lower than equilibrium 10% decline in real wages of NHS worker since start of recession Solutions to market failures in labour market - ANSWERSEducation and training Housing market reform Wage-setting UK raises NMW from £7.50 to £7.83 Evaluate solutions to market failures in labour market - ANSWERSIf increases elasticity of S(labour) - lower wages If D(labour) if elastic - min wage will increase unemployment Explain wage determination in competitive labour market - ANSWERSFirms are wage takers - set W where S = D S(labour) is perfectly elastic - AC = MC - max profits at MRP = MC - employ Q₁ Positive statement (def.) - ANSWERSEvidence based statement which can be proven true or false Normative statement (def.) - ANSWERSValue judgment which cannot be tested Scarcity (def.) - ANSWERSLack of resources to fulfil everyone's wants and needs Renewable resources (def.) - ANSWERSResources which can be replenished over time Non-renewable resources (def.) - ANSWERSResources which cannot be replenished once they are used PPF (def.) - ANSWERSMax amount of two goods that can possibly be produced in economy with given set of resources, time and technology Capital goods (def.) - ANSWERSUseful not in themselves but for goods and services they can help produce in future Opportunity cost (def.) - ANSWERSValue of next best alternative forgone Pareto efficiency (def.) - ANSWERSState of allocation of resources in which it is impossible to make any one party better off without making at least one party worse off Allocative efficiency (def.) - ANSWERSWhen value consumers place on good or service (reflected in price) = cost of resources used up in production Specialisation (def.) - ANSWERSWhen worker concentrates on performing specific task or narrow range of tasks in production process Division of labour (def.) - ANSWERSSeparation of production process into individual tasks Advantages of specialisation (micro) - ANSWERSWorkers gain skills in narrow range of tasks - higher productivity Workers