Question

What characteristics of the labour market make it distinctive from other markets, justifying a special sub-discipline of economics? What are the major implications of the neoclassical model of labour supply and demand? How realistic is this model? (5+3+2 = 10 points)

Answer 1

Answer

The characteristic which make the labor market distinguished or different from other are :The first thing is the wages system of the labor market which is very important part in distinguishing the labor market because this determine if the market is under competition (perfect) or not .Then the Demand and supply of labor which ultimately affect the production Also The productivity of the labor , stability and lack of fluidity and diversity of rates for similar kind of jobs determine the status of labor market of a country and determine its smoothness.The labor market having above characteristic will be distinguished from other market because it not being characterized by a norm of perfect competition and there is no wage which will regularize the market .

The most important and the major implication of neoclassical economic is the that It assumes that the value of product is derived for the material cost plus the labor cost and it also says that perception of consumer of the product value affect the price ,demand and supply of the product .Also the primary concern of customer is maximization of  personal satisfaction therefore they make decision regarding the purchase of product or service considering the product or service utility , .

This model is indeed realistic in my opinion , because of the reason that depending on the level of satisfaction among the customers the supply and demand of a particular product or service varies .Even if the small business company is providing cheap and best product ., its demand and supply will be high always because of satisfaction and affordability by the consumer despite of big brand which cost too high for the same things .

Have a good day !