Explain the relationship in a perfect market between a firm's demand for labour and the wage rate offered.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2017). The mark or mark type is shown in brackets.

1. [12] Explanation of perfect market demand (mrp) supply and determination of wage rate in the market and also for the firm.
2. L4 for a sound explanation and a clear understanding of the principles involved 9–12 (7–8 D&S)
3. L3 For a competent comment but with limited elaboration. No mrp maximum L3 7–8
4. L2 for a briefer explanation, probably not fully explaining the equilibrium. 5–6
5. L1 for an answer that has some basic correct facts but includes irrelevancies and errors of theory 1–4
6. [13] Wage rate likely to be reduced, unless collective bargaining raises it, mrp will move left as MR no longer = to AR, so MPP x MR is lower. Employment probably reduced unless union negotiates or there is a government wage. Really need mrp analysis show the changes.
7. L4 for a thorough analysis of wage determination with a clear comparison of perfect and imperfect markets. 9–13
8. L3 for a weaker analysis and critique of the possibility of the changes probably concentrating on wage level. 7–8
9. L2 for a correct but undeveloped analysis with only a brief discussion and no real conclusion 5–6
10. L1 for an answer that has some basic correct facts but includes irrelevancies and errors of theory 1–4