Labour markets

Question 1

The following figures relate to the demand and supply of office cleaners at certain wage rates. The demand and supply figures are in (000s):

WAGE RATE (£ per hour) DEMAND (000) SUPPLY (000)
10 20 80
9 30 75
8 40 70
7 50 65
6 60 60
5 70 55
4 80 50
3 90 45
2 100 40
  1. Plot the demand and supply curves and show the market wage rate and employment level.
  2. Illustrate and comment on the likely impact of a national minimum wage of £9.00 per hour for all workers.
  3. On your graph, sketch the likely effect of increased migration of cleaners from a low wage economy.

Question 2

  1. Draw a graph to show the effect of a labour strike on the wage rate and the quantity of labour employed. What determines how big or small the effect will be?
  2. What is the likely effect on the wage rate of dentists and the quantity of dentists employed if they become more skillful and productive, while at the same time fewer students apply to study dentistry at university.