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4 marksWage Differentials

CAPE Economics Unit 1 · 2009 · Paper 2 · Question 5(b)(iii)

If the workers become unionized, and their trade union successfully bargains for a wage rate of $400 (a 100% increase), how many workers will now be unemployed?

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Other parts of this question

  1. 5(a)(i)a)State the formula for computing the Marginal Physical Product of Labour (MPP).[2 marks]
  2. 5(a)(i)b)State the formula for computing the Average Physical Product of Labour (APP).[2 marks]
  3. 5(a)(i)c)State the formula for computing the Value of Marginal Product (VMP).[2 marks]
  4. 5(a)(ii)On the answer sheet provided, complete the table assuming that the price of the product is 100 per unit and the wage rate is 200.[18 marks]
  5. 5(b)(i)Plot the labour demand curve and the wage rate on the same diagram.[15 marks]
  6. 5(b)(ii)Determine the number of units of labour that the firm will employ and explain why.[7 marks]

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