Practise analysing labour demand, supply, MRP, wage determination, monopsony and intervention using diagrams, calculations and evidence on employment, rent and transfer earnings.
What would help a trade union to negotiate an increase in the wage rates of its members without causing a reduction in the numbers employed?
Labour costs are a major proportion of total costs.
The demand for the labour employed is elastic.
The demand for the good produced is elastic.
The demand for the good is increasing.
D
Developments in the electric vehicle (EV) industry
The advantage of the car is that it provides freedom for the consumer. However, the disadvantages of car use are that it creates congestion, carbon dioxide (CO2) and air pollution. These disadvantages led many countries to agree to replace internal combustion engine (ICE) cars with electric vehicles (EV) from 2030.
The successful introduction of EV is dependent on the development of battery technology and production of batteries to enable EV to drive a similar distance to ICE cars before they need re-charging. Better electrode design, battery assembly and chemistry are all technical aspects of battery production that could reduce costs, resulting in economies of scale from more efficient use of capital and labour. In addition to technical economies, there may well be purchasing economies of scale in battery production when buying raw materials and capital equipment in bulk.
Table 1.1 shows the estimated average costs of battery production for EV using two different technologies.
| Annual production | US$ per kwh | |
|---|---|---|
| kwh (millions) | Technology A | Technology B |
| 0.5 | 115 | 120 |
| 2.0 | 105 | 90 |
| 4.0 | 98 | 80 |
| 10.0 | 97 | 80 |
Table 1.1 Average costs of battery production
The shift to EV will cause redundancies for highly skilled mechanical engineers who have developed and refined the ICE. Often these workers are concentrated in specific areas, such as southern Germany.
The change from ICE cars to EV may also cause difficulties for governments in two ways. First, many countries rely on oil exports for a large part of their income. For example, Saudi Arabia receives 45 % of its gross national income (GNI) from oil exports. Secondly, other governments place an indirect tax on petrol (gasoline) and diesel as part of their general revenue. For example, Singapore charges S $ 0.41 per litre, approximately 17 % of the price.
Sources: Applied Energy 286 (2021) Economies of scale in battery cell manufacturing, 25 April 2022, and The Singapore Independent, 28 March 2022
Analyse, with the aid of a diagram, the likely impact of the change to EV on the labour market for workers producing ICE in southern Germany.
- Identifies the unemployment as Structural / Occupational 1,
- This will reduce wages as demand falls. 1 Need for re-training 1
S Wages & D1 & D & & S
W & & & &
W1 & & & &
& & & &
& & & &
& & L1 & L & Labour
Diagram award marks as follows:
Shift of demand from D to D (1)
Shows a fall in wages W to W1 and Fall in labour L to L1 / increase in unemployment (1) Axes/labels (1)
\end{tabular} & 6
How is marginal revenue product calculated?
marginal physical product × marginal revenue
marginal physical product ÷ price
total physical product × marginal cost
total physical product ÷ marginal cost
A