A Level Economics AQA Practice Exam

How is the Labour Supply Curve generally characterized?

1. It shows the total number of jobs available

2. It illustrates how labor supply responds to wage rate changes

3. It remains constant regardless of wage changes

4. It indicates the demand for skills in a specific industry

The correct answer is: It illustrates how labor supply responds to wage rate changes

The Labour Supply Curve is characterized by illustrating how labor supply responds to changes in the wage rate. This curve typically slopes upwards, indicating that as wages increase, more individuals are willing to offer their labor, reflecting the relationship between the wage levels and the quantity of labor supplied. Higher wage rates make working more attractive, encouraging individuals who are not currently working or are working fewer hours to enter the labor market or increase their hours of work. This responsiveness to wage changes is a fundamental aspect of labor economics, highlighting the principle that higher compensation can attract more labor, thus influencing the overall labor supply. The other options do not accurately describe the characteristics of the Labour Supply Curve. For example, it does not show the total number of jobs available, as that concept relates more to labor demand than supply. While the curve can shift in response to external factors such as demographic changes or policy impacts, it does not remain constant regardless of wage changes. Lastly, indicating the demand for skills in a specific industry is more closely related to the Labour Demand Curve rather than the supply side of the labor market.