A Level Economics AQA Practice Exam

What primarily defines the Labour Demand Curve?

1. The number of firms in the market

2. The willingness and ability of firms to employ workers at varying wage rates

3. The number of jobs available in a particular industry

4. The quantity of labor demanded per sector

The correct answer is: The willingness and ability of firms to employ workers at varying wage rates

The Labour Demand Curve is primarily defined by the willingness and ability of firms to employ workers at varying wage rates. This relationship illustrates how the quantity of labor that firms are willing to hire changes as the wage rate changes. When wages increase, firms may reduce the number of workers they employ because the higher costs might lead them to seek efficiencies or alternative means of production. Conversely, if wages decrease, they might hire more workers. This willingness to adjust employment levels in response to wage fluctuations is central to understanding the dynamics of the Labour Demand Curve. While the other options provide relevant insights into labor demand, they do not capture the essence of the curve itself. The number of firms in the market can influence overall demand but doesn’t directly explain the relationship between wage rates and employment. The number of jobs available in a particular industry is more a reflection of demand rather than a defining characteristic of the labour demand curve. Similarly, the quantity of labor demanded per sector is a result of various factors including wages and productivity, but it does not encapsulate the essential function of the curve, which illustrates how firms respond to wage changes. Thus, the correct definition emphasizes the interaction between wage rates and the employment decisions of firms.