The diagram shows the demand and supply curve of labour for a firm. The initial wage rate is given by W₀ and the equilibrium quantity of labour employed is L₀. A trade union that represents all of the workers negotiates a rise in wage rate to W₁. [Diagram of labour market with wage rate on y-axis, quantity of labour on x-axis, D and S curves, W0, W1, L0, L1, L2] What is the amount of unemployment that results from this wage rise?
This question uses a diagram from the original paper, which isn't shown here. Open the full paper from the past papers archive to see it.
✓ Correct answer
D: L₁L₂
Practise more questions on this topic
Oracle Prep sorts past-paper questions by topic, so you can drill Microeconomic decision makers and see which topics are most likely to come up next.
Sign up free →