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7 marksWage Differentials

CAPE Economics Unit 1 · 2011 · Paper 2 · Question 6(c)

Explain why a legal minimum wage alleviates poverty in a monopsonistic labour market but not in a perfectly competitive labour market.

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Other parts of this question

  1. 6(a)(i)Distinguish between 'wage differentials' and 'compensating wage differentials'.[4 marks]
  2. 6(a)(ii)State four causes of wage differentials.[4 marks]
  3. 6(a)(iii)Using two causes identified previously, explain why wages differ.[4 marks]
  4. 6(b)(i)Define the concept of 'poverty'.[2 marks]
  5. 6(b)(ii)Distinguish between 'absolute poverty' and 'relative poverty'.[4 marks]

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