• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Explain the main factors, which determine the wage rate in a competitive Labour Market.

Extracts from this document...

Introduction

Q. Explain the main factors, which determine the wage rate in a competitive Labour Market. Wages refers to the total package, cash plus benefits, given as a reward per time period to anyone who is employed by someone else. This encloses everyone from Doctors right down the line to waste disposal persons. Wage differentials or differences may therefore be much wider than a comparison of pay rates may suggest. Wages or net rewards from employment per time period, are a reward paid to the factor of production, labour. They are the price to secure quantity of labour (hours worked). There are two elements to the price of labour, the price of one kind of labour relative to another e.g. postman with respects to a clerk, and there is the real price of labour (if wages have gone up 10% compared to some earlier period but inflation has only gone up by 3% then real wages have increased relative to that base period) A person's wages can be known as their income. Income is the amount of money received by a household over a period of time. This income may come from employment, self-employment, dividends, rent or a variety of other sources Income distribution is the way in which total income is shared out between households. ...read more.

Middle

The demand curve for labour shows how many workers will be hired at any given rate over a particular time period. If the wage rate is high the company will be unable to afford to employ many workers however if the wage rate is low there can be many people employed. So the demand curve for labour is a down ward sloping due to the law of diminishing returns. This is explained using the following example. A factory is designed to hold 500 workers for instance is unlikely to be very productive if only one worker is employed. But there will come a point when output per worker will start to fall. There is an optimum level of production, which is most productively efficient. Eventually, if enough workers are employed, total output will start to fall. Imagine 10 000 workers trying to work in a factory designed for 500. The workers will get in each other's way and result in less output than with a smaller number of workers. This general pattern is known as the law of diminishing returns. The law of diminishing returns can be explained more formally using the concepts of total. ...read more.

Conclusion

Supply can also be sub grouped in to Inelastic Supply and Elastic Supply. Price elasticity of supply measures the responsiveness of supply to a given change in price. Supply and demand When demand and supply are put together we can determine the equilibrium price of a good or service i.e. (the wage of a person) Price Supply Equilibrium Price Demand Quantity Demand/Supply The above method is how wages are determine in simple terms the is a better-suited graph to explain the demand for labour. It also matters what type of supply is being taken in to account for examples doctors would have high demand and low supply said to be inelastic in supply compared to teachers who are said to have relatively low demand in N.Ireland and supply is high they are said to have elastic supply these can be represented in graphs below. E.g. Doctor E.g. Teacher Why the wage rates differ. Each worker is a unique factor of production, processing a unique set of employment characteristics such as * Age- whether young, middle aged or old * Sex- whether male or female * Ethnic Background * Education, training and work experience * Ability to perform tasks- including how hard they are prepared to work, their strengths and their manual or mental dexterity. A job where labour is in high demand but in short supply will pay higher wages. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Marketing & Research section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Marketing & Research essays

  1. Explain how wages are determined in a perfectly competitive labour market.

    If labour became more or less productive, this would cause the MRP curve to move - MRP = Marginal revenue product. This is a theory of wages where workers are paid the MRP to the firm. The price of a substitute could also change i.e.

  2. BTEC BUSINESS UNIT 2

    Financial resources Costs need to be managed within budgets, departmental managers need to ensure that they use their money effectively and that they do not use their money unnecessarily, if they foresee problems with their budget then they need to contact a senior member of staff prior to meeting the

  1. Business Studies Company Profile

    The company then merged with BFW; because of this the date of establishment is seen to be 1916 and not 1917. The company is now known as BMW AG. 1933 Production of aircraft engines continued. BMW separated off a side branch to manufacture this; this Aircraft Engine Division was called BMW Flugmotorenbau GmbH.

  2. Wage differentials Firemen v Robbie Williams

    The MRP curve for labour is an industry's demand curve for labour. It is the interaction of demand for supply of labour shown by the SS curve; that will determine the final wage rate W and the level of employment O.

  1. Marketing Research

    clarity for analysis and administration : The number and order of questions should be in sequence so that there is an ease of administration . None of the questions should be left out by the interviewer for want of clarity. The choice of various alternatives should be indicated clearly.

  2. I am going to be writing about the concepts of marketing distinctiveness of the ...

    work together with the Office of fair trading which have got the regulation of control misleading advertisements and asking media companies to take away the advert. ASA helps customers by working together with the media and advertisers to improve and create advertisements that will not insult or deceive customers by

  1. Business studies, product development

    are either Blue or Black depending on what I decide later on. I could use Navy Blue for school colours if I was interested. I would have to do some questionnaires to find out the final colour scheme because I have to know what want because I don't know what everybody wants.

  2. Applied Business Unit 2 Coursework

    I don't really think that it is important to have a company description in the job advert however all of the adverts I have analysed have done so. Therefore I am going to put in a brief description of the Warwick University.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work