• 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...


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.


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.


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


    All customers have to do is go onto the internet website and sign up. Also on the website they offer insurance quotes on goods sold at Coca Cola Enterprises. They also give advice on buying products online. The website also has a feature that highlights products that you may want

  2. Applied Business Unit 2 Coursework

    None of them ask about whether you have any disability as this would be illegal under the disability discrimination act. Firstly the application forms provided me with some extra heading to consider for my application forms including: * Asking whether I can contact the previous employer * Asking about a

  1. Applied Business Studies

    I want to have a good relationship where my employees can come to me and tell me if they don't like the way I am treating them, or any other concerns that is bothering them. For the role of deputy manager, I will be looking for someone that if definitely

  2. For this assignment I have been asked to produce a new marketing strategy for ...

    Creative agencies work with marketers to design a highly focussed communication in the form of a mailing. The mail is sent out to the potential consumers and responses are carefully monitored. Personal Selling Personal Selling is an effective way to manage personal customer relationships.

  1. Marketing Research

    * Whether the respondent understands all the questions * The time taken to admini9ster the entire questionnaire * Whether certain words in the questionnaire need explanation * Whether the respondent interprets the question correctly * Does the opening question generate interest * Does the fatigue effect creep in very early

  2. Mcdonalds. For this unit I will need to produce a portfolio of work investigating ...

    McDonalds Company owns the most amount of market share. Gaining a particular share of the market has helped McDonald's to shape as a business. The recognition of the business has increased therefore has resulted more consumers to be attracted towards the business. McDonalds has met with the objective of maintaining a particular share in the market, McDonalds is one

  1. business planning unit 8

    Consequently investors may be more comfortable in investing their funds in a better understood cooperate firm. Organizational Structure Every business needs to be organized. The best structures help a business to meet its objectives. However this does not mean that every business will be organized in the same way.

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

    Tesco has got loyalty cards (Tesco club card) but not just to please the customer by providing discounts on certain products but also for their own benefit which is collecting data through the club card. Marketing Mix Product The product can be either goods or services and is the key

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