(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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