Question 1
Firms may be willing to pay wages above the market clearing rate because
◦ it may raise profits by raising productivity.
◦ it may raise profits by reducing labour turnover.
◦ it may raise profits by raising the
AC curve.
◦ A and B
Question 2
What is a primary labour market?
◦ The market for workers in the agricultural, forestry and fishing industries
◦ The market for full-time permanent workers
◦ The market for workers who are frequently demanded
◦ The market for workers with specialist skills (lawyers, computer technicians, etc.)