Wage determination

The National Minimum Wage for people over 23 rose by 9.7% to £10.42 in April 2023. The industry most affected is hospitality.

(Source: adapted from https://www.gov.uk/government/publications/the-national-minimum-wage-in-2023/the-national-minimum-wage-in-2023)

Draw a labour market diagram to show the likely impact of the increase in the National Minimum Wage for hospitality employees.

There has been a significant decrease in the supply of agricultural workers in the UK. Which one of the following is the most likely cause of this decrease?

(a) Explain one reason why consumers buy less than the social optimum quantity of healthy food.

(b) With reference to Extract B, examine two likely reasons why wages in supermarkets are above the National Minimum Wage of £10.42.

(c) With reference to Figure 1 and Extract C, discuss whether supermarkets charging similar prices for petrol is evidence of collusion. Use game theory to support your answer.

EITHER

(d) Evaluate the microeconomic and macroeconomic effects of high levels of inflation. Refer to the UK or any other developed economy in your answer.

Explain one reason why consumers buy less than the social optimum quantity of healthy food.

With reference to Extract B, examine two likely reasons why wages in supermarkets are above the National Minimum Wage of £10.42.

With reference to Figure 1 and Extract C, discuss whether supermarkets charging similar prices for petrol is evidence of collusion. Use game theory to support your answer.

EITHER

Evaluate the microeconomic and macroeconomic effects of high levels of inflation. Refer to the UK or any other developed economy in your answer.

Evaluate the microeconomic and macroeconomic effects of a regional trade agreement between the UK and the EU.

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With reference to Figure 1 and Extract A, explain what is meant by ‘price inelastic demand’ (line 8).

Examine one likely externality that arises when a producer generates electricity by burning gas. Use a diagram to show the external costs of production.

With reference to Figure 2 and Extract B, discuss the possible constraints on business growth for firms supplying energy to households in the UK.

EITHER

Evaluate the microeconomic and macroeconomic factors that explain gender-based wage differences in the UK oil and gas industry.

Evaluate the microeconomic and macroeconomic advantages for a country specialising in energy production using gas.

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Index of pay in the public and private sector.

Nominal average weekly earnings (base year January 2018 = 100)

(Source adapted from: https://www.ft.com/content/48dafbb9-371d-4683-9afb-26652add888c)

Which one of the following is the ratio of public sector pay relative to private sector pay in 2022?

Over 90% of nurses work in the public sector. Nurses in the public sector have experienced wage rises lower than those in the private sector over the past 10 years.

why nurses in the public sector have had lower wage rises than those in the private sector.

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Using the information provided, explain one externality that arises in the food delivery market.

With reference to Extract B, examine whether the demand for delivered food is price inelastic and income elastic.

With reference to Extract C, discuss the likely effects of increasing integration within the food delivery market.

EITHER

Evaluate the microeconomic and macroeconomic effects of a depreciation of the pound. Refer to restaurants or other food delivery services in your answer.

Evaluate the microeconomic and macroeconomic effects of significant increases in the minimum wage. Refer to restaurants or other food delivery services in your answer.

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Statement 1: Since Poland joined the European Union (EU) in 2004, over one million of its workforce have migrated to other countries in the EU.

Statement 2: Many engineers have left Poland for higher paid jobs in other countries in the EU.

(Source: https://www.forbes.com/sites/freylindsay/2019/08/09/polands-emigration-rate-is-falling-but-people-are-still-worried-about-the-brain-drain-bogeyman/#9550525792e6)

Which one of the following best describes the two statements above?

Statement 1 Statement 2

Explain the likely impact of migration on the wage level of engineers in Poland.

The national living wage, the minimum wage for 25-year-olds and over, is expected to rise to more than £10.50 an hour in 2024 compared with £8.72 in 2020. The wage does not apply to the UK’s self-employed and ‘gig economy’ workers.

Some economists said the increase was ambitious. Business groups warned that employers in sectors such as social care could be hit hard. In large parts of the north of England the living wage has already reached two-thirds of local median earnings, said Professor Shackleton.

(Source adapted from: https://www.theguardian.com/uk-news/2020/mar/11/budget-2020-national-living-wage-national-insurance)

Evaluate the disadvantages of a significant increase in the national living wage on a specific labour market, such as that for social care workers.

Using the information provided, explain the market structure that best describes the hand car wash (HCW) industry in the UK.

Examine two reasons why the demand for HCWs increases during a period when consumer ‘incomes fail to keep up with inflation’ (Extract A line 8).

Discuss the likely effects of changes in the level of migration on firms such as HCWs in the UK. Use a labour market diagram and the information provided to support your answer.

EITHER

Evaluate the microeconomic and macroeconomic factors which determine the number of firms in an industry. Refer to HCWs or another industry of your choice.

Evaluate the microeconomic and macroeconomic effects of increased government intervention in an industry. Refer to HCWs or another industry of your choice.

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In July 2017 it was announced that only a third of the BBC’s 96 top earning presenters were women and that its seven highest-paid presenters were all men.

According to the High Pay Centre, in 2018, UK chief executives can earn 120 times more than the average full-time worker earning £28 758.

With reference to an industry of your choice, evaluate why wage differences exist within the UK labour market.

With reference to Figure 1, explain one likely reason for the overall trend in the real price of gas and electricity.

With reference to Extract A, discuss the likely effectiveness of ‘measures to open up and increase competition’ in the UK energy market.

With reference to Extract B, assess how the regulation of energy suppliers’ profits is likely to affect consumers and suppliers in the energy market.

The price elasticity of demand for electricity in the UK is estimated to be –0.35 in the short run and –0.85 in the long run.

With reference to Extract A and your own knowledge, examine two possible reasons for the change in price elasticity of demand for electricity over time.

With reference to Extract C and your own knowledge, discuss policies businesses and government might implement to reduce labour immobility to benefit the energy sector.

With reference to Extract D (line 18), explain the meaning of the term ‘output gap’. Use an aggregate demand and aggregate supply diagram in your answer.

With reference to Figures 4 and 5 and your own knowledge, examine the relationship between the national debt as a proportion of GDP and the fiscal deficit.

Discuss the likely impact of the National Living Wage on the profitability of firms. Use a cost and revenue diagram in your answer.

EITHER

With reference to the information provided and your own knowledge, evaluate the likely microeconomic and macroeconomic influences on the UK’s international competitiveness.

With reference to the information provided and your own knowledge, evaluate the microeconomic and macroeconomic effects of a government policy of cutting public expenditure rather than raising taxes as a means of reducing a fiscal deficit.

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