Economics 9708 · AS & A Level · Long-run costs and economies of scale

Long-run costs and economies of scale — practice question

(a)[12]

Distinguish between transfer earnings and economic rent. Using diagrams, explore the connections between transfer earnings, economic rent, the elasticity of supply of labour and an individual worker’s wage rate.

(b)[13]

‘Trade unions may secure higher wage levels only by causing higher unemployment.’ To what extent do you agree with this statement?

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