Question

(a) Why does the labour demand curve slope downwards?

(b) A garment factory’s production function is provided in the table.The gross profit per unit (difference between selling price and material cost, but not including the cost of labour) is $100.

# Workers Output
1 20
2 36
3 48
4 56
5 60
6 62

(i) If the wage rate is $1,000 a week, how many workers should the factory hire?

(ii) If a surge in popularity for the factory’s brand allows them to raise the product price such that the gross profit rises to $150, how many workers will the factory hire now?

(iii) Calculate the number of garments produced in each of the two cases above.

 

Question 4

Using your knowledge and understanding of supply and demand analysis to graph the following and explain your graph:

(a) an increase in labour productivity.

(b) an increase in preference for work.

(c) the trade union withdraws labour through a strike.

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