CAIE A-Level Economics 8.3.8 Wages in Imperfect Labour Markets

CAIE A-Level Economics 8.3.8 Wages in Imperfect Labour Markets
Cambridge International AS & A Level Economics 9708 syllabus for exams in 2026, 2027 and 20282026–2028

Practise analysing trade unions, minimum wages and monopsony through labour-market diagrams and evaluating effects on wage, employment, unemployment, rent and transfer earnings.

How this is tested

  • draw monopsony equilibrium where MCL meets MRP and read the wage from labour supply
  • apply a minimum wage to competitive or monopsony diagrams and identify employment effects
  • evaluate union wage power using labour-demand elasticity, employment conditions and bargaining strength

Question 12

[Maximum number: 1]

A government intervenes to raise the wages of a group of workers to prevent their exploitation.
Where might such government intervention be justified?

A

in an industry that is protected by tariffs on imports from abroad

B

in an industry where a trade union negotiates wages for the workers

C

in an industry where the output is produced by a single firm monopolist

D

in an industry where workers are employed by a monopsonist