1. Labour markets
2. Why does a firm employ labour up to the point where wage = MRP. Why does this give us a negative slope for the demand curve for labour?  [4]

1. How might we expect the elasticity of demand for labour to change between in the short term and the long term and why? How does this news story confirm your argument?

http://www.bbc.com/news/world-us-canada-42170100 [3]

1. i) Theory tells us that as productivity increases (MRP) then so should the wage.

What do these graphs tell us has been happening since about 1975? [1]

1. ii) If the returns to labour are falling, who is benefitting from this increase in productivity? [1]

iii)  What problems might be caused by this shift and what could be done about it? [3]

Source: EPI analysis of data from Bureau of Labor Statistics (BLS)

1. Who were the Luddites and what were the fighting for? How might their historical example be used to develop a more optimistic view of labour markets in future? [3]
2. Externalities
3. Go the City webpage and look at the paragraph about winter parking. https://www.princegeorge.ca/City%20Services/Pages/Parking/ParkingDowntown.aspx
4. Why is fining people for parking justified? Analyse the issue as a negative externality. Use a graph to support your answer. [3]
5. Why is the website wrong in economic terms when it describes overnight parking in City lots as ‘free’? [2]
6. i ) Briefly explain how Coase Theorem works for a negative externality. [3]
7. ii) What problems does it have with respect to putting a value (price) on the externality? [2]
8. Why might education be underprovided in a free market? Explain one way in which this situation can be improved. Use a graph to support your answer. [4]

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