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4 marksThe Demand for and Supply of Factors

CAPE Economics Unit 1 · 2013 · Paper 2 · Question 5(d)

Draw a demand and supply diagram of the labour market showing the decomposition of earnings into transfer earnings and economic rent.

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Other parts of this question

  1. 5(a)Outline the marginal productivity theory of factor demand.[3 marks]
  2. 5(b)(i)a)Calculate the marginal product for EACH additional worker.[3 marks]
  3. 5(b)(i)b)Calculate the marginal revenue product for EACH additional worker.[3 marks]
  4. 5(b)(ii)Determine the quantity of labour that will be employed per day.[1 mark]
  5. 5(b)(iii)Explain why more (or less) labour is NOT employed.[5 marks]
  6. 5(c)Evaluate the effects of a government minimum wage on the labour market.[6 marks]

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