New A Level Economics. Labour Markets SAMPLE. Resources for Courses

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Amelia Robbins
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1 New A Level Economics Labour Markets

2 Digging a Hole Teacher Instructions This resource (including the Powerpoint game file) is used to introduce the concept of marginal physical product and marginal revenue product and how they may appear on a chart. Having calculated the revenues and marginal products as part of the activity, students then chart these on the worksheets. The resource can then be used to go on to discuss what determines the shape of a MRP and MPP curve. Before you start: The student worksheets are pages 4 to 7 of this resource. Print off pages 4 and 5 and hand to students before the start of the activity. Pages 6 and 7 should be given to the students on completion of the activity. Separate the group into (up to) 5 teams. Running the activity Start the Powerpoint slideshow, ensuring that the macros have been enabled when prompted. Show the first 5 slides and explain the activity (refer to the student worksheets as well). On completion of these slides, read through page 4 to ensure that students understand marginal revenue, marginal physical product and marginal revenue product. The students appear to be participating in a game that requires them to work out the most efficient way to dig holes by guessing at which way they should combine the human resource. Ultimately, the students are recording the revenues and efficiency over the 5 rounds of the game to see how they change and how they would look on a diagram. The students do not need to know the actual purpose until the end of the activity.

3 Digging a Hole Note (for teacher): The optimum combination over the 5 rounds is to have 1 rock breaker, 1 barrow user and a further 3 diggers (in that order). This will produce the highest number of holes. Having explained the purpose of the activity (who can get their workers to dig the most holes), give the students a couple of minutes to decide on their first decision: should they choose to have a further digger, a rock breaker or a barrow user? When they have decided, get each team to tell you their decision. Invite them to the computer (don t show this to the rest of the class) and input their decision by clicking on the team name and then the button of their decision (e.g. a digger). Ask them to record the changes to number of holes dug per week and Total Revenue (which is number of holes dug x price). Students should then be sent back to calculate the marginal revenue, marginal physical product and marginal revenue product. On completion, if they wanted to check the outcome they can return to the team screen and you can click on the button to reveal the overall table. Repeat this with all 5 teams. Repeat this over all 5 rounds ensuring the students complete their worksheets during each round. When the activity is over go through each team s outcome, pointing out which team has completed the activity with the largest number of holes and revenue. Then allow students to use their data to complete the diagrams using the blank diagram on page 6. Use page 7 to show the relevancy of their diagram.

Your aim to increase the number of holes you can dig and increase revenue. Digger Rock breaker Barrow user You must decide which worker to employ in each round of the game.

4 digging a hole student worksheet The activity will last for 5 rounds. To begin with you have 2 diggers digging holes. At the beginning of each round you must decide on which type of worker you wish to employ for that round. You have 3 choices: another digger, a rock breaker or a barrow user. Your aim to increase the number of holes you can dig and increase revenue. Digger Rock breaker Barrow user You must decide which worker to employ in each round of the game. Who do you think will make your hole digging the most effective? Have your worksheet ready to fill in once you have decided! On making your decision, tell your teacher who will inform you of your data. Rounds Holes dug per week Total Revenue ( ) Marginal Revenue ( ) Marginal Physical Product Marginal Revenue Product Total Holes Dug to date Total Revenue to date

Price Price is determined by demand and supply. As the firm increases output they will need to reduce their price in order to sell more of their products. This game assumes that all output is sold.

5 Price Price is determined by demand and supply. As the firm increases output they will need to reduce their price in order to sell more of their products. This game assumes that all output is sold. The schedule is below: Number of holes Price ( ) per hole Number of holes Price ( ) per hole Over 50 holes 60 Over 500 holes 33 Over 100 holes 50 Over 550 holes 32 Over 150 holes 45 Over 600 holes 31 Over 200 holes 42 Over 620 holes 30 Over 250 holes 40 Over 640 holes 29 Over 300 holes 38 Over 660 holes 28 Over 350 holes 36 Over 670 holes 27 Over 400 holes 35 Over 700 holes 26 Over 450 holes 34 Total Revenue - Total number of holes x price per unit. Marginal Revenue - The increase in revenue as number of workers increases by one. Marginal Physical Product - The increase in output (number of holes) as the number of workers increases by one. Marginal Revenue Product Marginal Physical Product x Price. Wages each of your workers earns 2,500 per month no matter which job they undertake. This number is not relevant as the activity is under way but will be important for calculations when completed. you have

6 Draw in a marginal physical product curve. Marginal physical product Number of workers

7 Draw in a marginal revenue product curve. A firm will continue to employ more workers as long as the Marginal Revenue Product is greater than or equal to the wages of employing the extra worker. How many workers would your firm employ? Marginal revenue product Number of workers

9 Diminishing Marginal Returns Teacher Instructions A simple way of illustrating the concept of diminishing marginal returns to students. Resources Needed There are a variety of ways in which this exercise can be done, but the simplest is with: Two boxes Lots of scrunched pieces of waste paper One student to count A grid to record the successful deliveries A piece of graph paper for each student This exercise works best with groups of more than twelve, but it is possible to do it with smaller groups if they carry out the task more than once. Initially explain that you own a small business which takes pieces of scrunched up paper from one side of the classroom to the other. You should then explain that the staff you hire are not particularly well-motivated and it is not really in their interests to rush. A student should be chosen who is then given 30 seconds to carry as many pieces of paper, one at a time, from one box to the other, meanwhile another student records the amount on the board. After 30 seconds you explain that your business has been very successful and that you feel it is time to expand your business. You decide to hire another employee, with the only provision that each piece of paper must be passed between each employee. The students are then given 30 seconds to move as many pieces of paper from one box to the other. Hopefully this time they will move more than double the amount of the previous attempt, thus illustrating increasing returns to scale.

10 Diminishing Marginal Returns This is then repeated again and again until all of the students, bar the one who is counting, are involved. The key point to remember is that each piece of paper must be passed between each employee. Also, be aware that by their very nature, students WILL try to cheat! They will start to feel competitive and come up with different ways of getting around the rules, but this should be very much discouraged, as it affects the expected results. Also any pieces of paper that are dropped are counted as breakages and should not be included in the total. When all the students are included, assuming there are enough of them, initially we should see increasing returns, followed by diminishing returns and eventually negative returns. The students should then plot these on a graph, assuming 5 per worker/hour and the quantity of delivered products on the x-axis. Hopefully the results will be clear to see. When they have done this a discussion can take place about what factors slowed the rate down and the students themselves should identify the fact that having one line slowed them down (the fixed factor of production), so if two production lines were introduced, more could be produced, until a third is needed etc. This then introduces the difference between diminishing returns, with a fixed factor of production and economies of scale.

11 New A Level Economics Labour Markets

12 Lorenz Curve Analysis Teacher Instructions This activity gives students both the opportunity to increase their understanding of the distribution of in the UK and also the opportunity to further develop the necessary quantitative skills for A-level Economics. Students should start by looking at the data provided on, and tax. They should then calculate the cumulative level of initial, and then the cumulative % of initial for each group. Then repeat the exercise for, and then both and tax. Finally, they should plot two types of graphs: 1 A Lorenz Curve: showing before tax,, and and tax 2 A bar chart: showing, for each, before tax,, and and tax Hints and tips Some students may need a reminder of what is meant by cumulative and s (although they should have done this topic in GCSE maths). An easy way to explain it to them is to ask them to imagine everyone in the country lined up from lowest to highest, and then splitting them into 10 equal-sized groups. Extension Exercise The data used in this resource is taken from Table 14 on the following ONS webpage: household-/historical-data /summary--historical-data html Open up Table 14, and explore the data in more detail there are some interesting observations to make. You may want to encourage students to look at and try to explain: The pattern of maternity The pattern of NHS The proportion of original spent on alcohol duties and tobacco duties The pattern of child benefit The pattern of investment, as a good proxy for wealth

13 Task 1 calculating data Study the data below, and then complete the table the first few calculations needed have been done for you as an example. Average per household per year 1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th Original original ( ) ( ) % of Income % of Income and tax and tax % of and tax 1.13 ( ( ( ( ) 2.43 ( (

14 Task 2 plotting Lorenz curves On a piece of graph paper, you will be plotting Lorenz curves to illustrate the data that you have just calculated. On the same set of axes, you will draw one curve for original, one curve for and one curve for tax Hints and tips Label your x-axis cumulative share of population. This axis shows the poorest 10%, then the poorest 20%, then the poorest 30% and so on. Label your y-axis cumulative share of Use 3 different colours to plot your 3 different Lorenz curves The bigger you can draw your curves, the easier it will to plot them and to interpret them Some follow-up questions for discussion 1 Which sees the smallest change in their following taxes and? 2 What is the % decrease in for the richest following taxes and? 3 What is the % increase in for the poorest following taxes and? 4 Do you think the UK s tax and benefit system does an effective job in redistributing? Task 3 bar charts On a separate piece of graph paper, you should now plot bar charts to illustrate the levels of original,, and /tax for each. Your chart should look something like this: Income Original Income Income & tax 1st Decile groups

15 Calculation Solutions The answers are shown below, in bold, to 2 decimal places. Average per household per year 1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th Original original ( ) ( ) % of Income % of Income and tax and tax % of and tax 1.13 ( ( ( ( ) 2.43 ( (

16 New A Level Economics Labour Markets

17 The Value of a Job to our Society Teacher Instructions The purpose of this activity is to stimulate discussion about how wages are determined. The activity should be undertaken before any input has been made about wage determinants. The premise of the exercise is to discuss how students value different occupations. The activity promotes a discussion about how important they think any particular occupation is to society. Having discussed and ranked occupations the students are then shown the average wage for each occupation showing how much each occupation can earn (based upon records from the ONS, November 2014). Running the activity The activity will take between 20 and 30 minutes. You will need to print out and then cut out a sheet of Russian Dolls (slide 6) per team (teacher decides how many teams). Each student should have a copy of the student record sheet (slide7) as evidence. Run the slideshow and introduce the activity by showing slide 2. Press the space bar to start a 5 minute timer allowing students to discuss ranking. They should write the occupation on the Russian Dolls showing the least to most valuable occupations. After the timer has stopped click on the button Start. Lead a class discussion about the relative values of each occupation and come to a class-based decision on which is the most and least valuable of occupations.

The Value of a Job to our Society Using the drop-down boxes, indicated which is the most valuable (score 1 ) to the least valuable (all the way through to 12 ).

18 The Value of a Job to our Society Using the drop-down boxes, indicated which is the most valuable (score 1 ) to the least valuable (all the way through to 12 ). On completion click on the button Check answer. The actual wages of the occupations can now be discussion. Using the space bar, scroll through the average wage per occupation showing the lowest wage first all the way through to the highest wage. Click on the See data table button to view both the students rankings of value and the wages of the occupations. To edit the table The data used for this activity can be edited. Go to the table on slide 5 and edit the table data the teacher can edit the occupations and the average wage per occupation. Run the slide and click on the button below to update the activity.

student record sheet In teams you have 5 minutes to rank the occupations in the table on the left in the order in which you think they have value to our society.

19 student record sheet In teams you have 5 minutes to rank the occupations in the table on the left in the order in which you think they have value to our society. What is more valuable and less valuable is for you to decide. The most valuable should be classified as 1 and the least valuable as 12. Be prepared to justify your answers. Rank Occupation Value 1 Architects 2 Chartered accountants 3 Chefs 4 Electricians and electrical fitters 5 Farmers 6 Fire service officers 7 Hairdressers and barbers 8 Journalists 9 Midwives 10 Nurses 11 Solicitors Teachers 12

New A Level Economics. Theory of the Firm SAMPLE RESOURCE. Resources for Courses

New A Level Economics. Theory of the Firm SAMPLE RESOURCE. Resources for Courses New A Level Economics Theory of the Firm Resources for Courses Digging a Hole Resources for Courses Teacher Instructions This resource (including the Powerpoint game file) is used to introduce the concepts