3.5.2 Supply of labour Quiz: Pearson Edexcel Economics A, Unit 3

The 20 questions

1. The supply of labour to a particular occupation is:

   • The total labour force of the whole economy at any time
   • The number of hours worked by one worker in a week
   • The total output of all firms in a particular sector
   • The number of workers willing and able to work in that job at a given wage

2. Which factor influences the supply of labour to an occupation?

   • The wage relative to other occupations, non-pecuniary benefits, and the training and qualifications required
   • Only government spending on infrastructure in the region
   • Only the interest rate set by the central bank
   • Only the rate of inflation in the economy

3. Geographical immobility of labour refers to:

   • Difficulty workers have in moving to jobs in other regions, for example due to housing costs or family ties
   • Workers moving between occupations within the same region
   • Workers lacking the skills needed for a particular job
   • Firms moving their operations abroad to cut costs

4. Occupational immobility of labour refers to:

   • Workers who are paid too much to move between jobs
   • Workers lacking the skills or qualifications to switch to a different occupation
   • Workers who are unwilling to move house to another area
   • Workers unable to find affordable housing in the local area

5. What is a backward-bending labour supply curve?

   • Labour supply is completely independent of the wage workers receive
   • Labour supply is perfectly inelastic at every wage level
   • Labour supply always rises as the wage rises in every market
   • At high wages, workers may choose more leisure, so labour supply falls as the wage keeps rising

6. Which factor is most likely to increase the supply of nurses to a region?

   • Closing nurse training colleges in the region
   • Higher pay for nurses relative to other jobs
   • Lower pay for nurses compared with other jobs in the region
   • Rising housing costs in the region that deter workers

7. Labour supply is more elastic when:

   • Wages are fixed by law, so workers cannot respond to pay changes
   • Workers have specialised skills that take many years to acquire
   • Workers can easily switch jobs and the training needed is short
   • Workers are geographically immobile and cannot move between regions

8. A region has high unemployment while jobs go unfilled in another region. Which best explains this?

   • Geographical immobility, due to housing costs and family ties
   • A minimum wage set too low to attract workers
   • An excess supply of goods in the economy
   • Perfect mobility of labour across all regions of the country

9. Which policy best addresses occupational immobility?

   • Policies that cut prices in the goods market
   • Policies that only tackle geographical immobility by moving firms
   • Retraining programmes that give workers skills for new occupations
   • Policies that change capital immobility in the economy

10. Why might a high relative wage in one sector attract workers from others?

    • It reduces the number of workers willing to work in that sector
    • It makes supply perfectly inelastic at every wage
    • It lowers labour productivity in the sector
    • It raises the net benefit of working there, shifting labour supply to the right in that sector

11. Which is an example of a non-pecuniary benefit of a job?

    • A basic wage paid each month
    • Flexible working hours or a pleasant working environment
    • Commission paid on sales made by the worker
    • Overtime payments added to the wage bill

12. Which barrier reduces the labour supply to a skilled occupation?

    • Long and expensive training and qualification requirements
    • Low qualification standards that anyone can meet easily
    • High mobility of workers between occupations and regions
    • Short and free training programmes available to everyone

13. Migration into a country affects labour supply by:

    • Shifting the labour supply curve to the right in the occupations that migrants enter
    • Reducing labour productivity to zero for the migrant workers
    • Shifting labour supply to the left in every occupation
    • Having no effect on wages in any sector of the economy

14. A job needs costly training, so employers must pay a higher wage to attract workers. What does this higher wage represent?

    • Workers' lack of interest in pay for the job
    • A compensating differential for the cost of training and the time invested
    • A perfectly elastic supply curve for the occupation
    • A government-set equilibrium wage for the occupation

15. Evaluate: should government reduce geographical immobility through housing policy?

    • No, because housing has no effect on the labour market at all
    • Possibly, since cheaper housing can increase mobility, but effects depend on local demand, infrastructure and wider policy
    • No, because labour mobility is always perfect in every region
    • Yes, by banning workers from moving between regions

16. Labour supply is L = 20 + 4W. What quantity of labour is supplied at a wage of £5?

    • 80 workers
    • 25 workers
    • 40 workers
    • 20 workers

17. Using L = 20 + 4W, what is the change in labour supply when the wage rises from £5 to £7?

    • Labour supply stays at 40 workers in both cases
    • Labour supply rises by 4 workers, to 44
    • Labour supply falls by 8 workers, to 32
    • Labour supply rises by 8 workers, to 48

18. Why can labour supply be inelastic in the short run?

    • Wages have no effect on workers in any period
    • Labour supply is always perfectly elastic in every period
    • Workers cannot quickly acquire new skills or relocate, so supply responds only slowly to wage changes
    • Workers always change jobs instantly in response to any pay change

19. Which best describes market failure caused by immobility in the labour market?

    • Markets always clear instantly, so no misallocation can occur
    • Wage differences persist and resources are misallocated, as jobs go unfilled while workers remain unemployed
    • Immobility improves efficiency by keeping workers in one place
    • Firms can always hire freely whatever the local conditions

20. Evaluate: 'Labour supply is always perfectly elastic in the long run.'

    • True only in monopoly markets, where supply is controlled
    • False, because labour supply is always zero in the long run
    • True in all cases, since workers always respond fully to wages
    • Overstated: long-run supply is more elastic, but barriers such as skills and immobility can still limit the response

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