Topic 1

What is Economics?
Production (Supply) Transforming/ converting inputs (resources) to
consumable outputs (products/ services)

Producers = Inputs > CELL [Capital ($): Capitalist (invest $), Enterprise:
Entrepreneur/ Businessman (ideas), Land: Landlord (raw materials),
Labour: Workers (someone who does the job) HR Economics
Convert Inputs to Outputs
Sell to Consumers (Consumptions)
$ Revenue

Consumption (Demand)

Employment

Buyer (Demand)
-

Seller (Supplies)

Employers
Firms

Workers
Everyone

Market
Exchange

Population (100)

20
10
70

Non Labour

Unemployed

Employed

Labour force Participation Rate: LFPR = Total Labour Force / Total Population = 80
/ 100
Employment Rate: ER = Employed / Total Labour Force = 70 / 80

Unemployment Rate: UER = Unemployed / Total Labour Force = 10 / 80

Underemployed people are included in employed number here.
Unutilisation = Underemployed + unemployed

Trend in LFPR INCREASE

1) More PT worker: Why?
Part time workers work >35 hours per week
*Remember Page 14 in Topic 1 (Part-time Employment)
2) More Females: Why?
Higher Wage
*Female LFPR
3) More mature: Why?
*LFPR of Mature age population
4) More immigrants: Why?
Unemployment
Causes:

High Wage as compared to other factors of production

High wage -> Productivity?
Recession
Social Security Benefits (from government) workers become lazy on the
expense of other tax payers

Types/ Categories (Arranged according to severity)

Cyclical (Economic Recession)
Structural (Lack of skill/ skill gap) as a result of technology advancement
or government/company direction. E.g Knowledge era now; factory
workers are losing jobs.
Countries that have expansive Lands do not go through as much
STRUCTURAL changes as Singapore needs
Frictional (Temporary or Transitional)
Natural (Combination of Structural & Frictional)
Hidden (Conventional measure of unemployment have been subject to
criticism cos they tend to underestimate the level of unemployment. The
ABS unemployment figure fails to measure the withdrawal from the LF of
those persons who would continue to seek work if they felt that there was
a reasonable possibility of finding a job)
KEY AREAS
Definitions/ meaning/ statistics/ formulas: LF, Employment, Unemployment

 Trends in Labour market increases (Part time, female, matured,

immigrants) why? Statistics.
Unemployment: Causes and types
Hidden unemployment
Underemployment (society has not fully utilised the persons value and
potential) and underutilisation (single parents, ppl with disability, low
educational attainment, indigenous population, recent immigrants)
Latest development of Australia Labour Market

Topic 2 Labour Supply

An individual: objectives to maximise utility (happiness/ satisfaction)
within constraints of resources. HOW? Through Consumption of resources
goods/ services ($) & leisure (time). There is budget constraint/ scarcity
(opportunity cost). ($) comes from labour income: wages and age. Make a
choice on which one of the resources to utilise more. Best is utilise both to
the maximum.
Wages (W) pay per hour for this topic
L Leisure for this topic
H Working hours
1. If w is positive, then it is wage of labour (per hour income of labour)
2. If w is negative, then it is opportunity cost of leisure
w x h = $20 x 10 = $200 (income of labour)
-w x L = 20 x 14 = -$280 (cost of leisure)
Budget Constraint

L
= C / L

1. Slope of BL is -w = C/L; constant throughout

2. Indifferent curves never cross path
3. Slope of indifferent curve is = C/ L (not constant)