Discuss whether a decrease in wage rates and an increase in
working hours will always reduce the supply of workers to a firm. (8 marks)
Answers
Wage rates are a key influence on the supply of workers (1) a decrease in wages would
reduce the financial return from working (1) workers may decide to switch to another firm (1)
or to another occupation (1).
Longer working hours would reduce leisure time (1) this may make the job less attractive (1).
Up to 5 marks for why it might not:
Wage rates and working hours may not be better elsewhere (1) there may be a lack of job
vacancies (1) during an economic downturn/recession/period of high unemployment (1).
Earnings may still be high despite a fall in wage rates (1) if e.g. bonuses/overtime payments
increase (1).
Workers take into account job satisfaction (1) may stay in the job if they enjoy it (1).
Workers may stay in the job if working conditions are good, there are long holidays, good
promotion chances, good pensions and good fringe benefits (up to 2).
Note: maximum of 6 marks if reference only to decrease in wages or increase in working hours.
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